What is an alternate director and how do you appoint one?
From time to time a director may be unable to attend to company business for various reasons - for example, traveling overseas. If the constitution permits, an alternate director can be appointed to act in his or her place. Such permission is essential, as it removes the need for an additional director to be appointed which would alter quorum and majority requirements for board meetings.
The constitution, however, must provide for the method of appointing the alternate, that the alternate cannot have an alternate, and that the alternate ceases to hold office when the person for whom he or she is alternate, ceases to hold office. Usually the same method for appointing directors will be used to appoint an alternate director.
The resolution or notice making the appointment will set out the terms on which the alternate is to act. He or she will sign the usual director’s consent to act and the company must notify the Registrar of Companies within the required 20 working days. No mention is to be made of the alternate nature of the appointment. That is an internal matter for the company, recognised by the fact the Companies Act 1993 refers simply to directors without further distinction.
Third parties dealing with an alternate director need only know that his or her name is on the list of directors on the companies register. The alternate director’s signature on a contract as Director will bind the company (Section 180 of the Act). Section 18 prevents a company from contending that the alternate – or any other director on the list – was not properly appointed or did not have the powers that directors customarily exercise.