Directors Service Agreement in New Zealand: What You Need to Know
If you are a director of a company in New Zealand, it is important to have a Directors Service Agreement in place. This agreement sets out the terms and conditions of your appointment as a director, including your duties and responsibilities, and the expectations of the company.
What is a Directors Service Agreement?
A Directors Service Agreement is a legally binding document that sets out the terms and conditions of a director`s appointment to a company. The agreement is usually entered into between the company and the director, and outlines the rights, responsibilities, and obligations of both parties.
What should be included in a Directors Service Agreement?
The following are some of the key elements that should be included in a Directors Service Agreement:
1. Appointment and duties: The agreement should clearly outline the director`s role, responsibilities, and duties, and the company`s expectations of the director. This may include attending board meetings, providing strategic guidance, and maintaining confidentiality.
2. Term of appointment: The agreement should specify the length of the director`s term, and the conditions under which the appointment may be extended or terminated.
3. Remuneration and expenses: The agreement should specify the director`s remuneration package, including any fees, salary, or bonuses, as well as any expenses that the director may be entitled to claim.
4. Confidentiality and non-compete clauses: The agreement may include clauses that prohibit the director from disclosing confidential information or competing with the company during or after their appointment.
5. Indemnification and liability: The agreement should specify the extent to which the director may be indemnified for any losses or liabilities incurred in the course of their duties, as well as any limits on their liability.
6. Termination and resignation: The agreement should outline the grounds on which the director`s appointment may be terminated, and the process for resignation.
Why is a Directors Service Agreement important?
A Directors Service Agreement is important for several reasons:
1. Clarity: The agreement provides clarity on the director`s role and responsibilities, as well as the expectations of the company, reducing the risk of misunderstandings or disputes.
2. Protection: The agreement can protect the director from liability or losses incurred in the course of their duties, as well as provide a framework for resolving any disputes.
3. Compliance: The agreement can help ensure that the director complies with legal and regulatory requirements, as well as best practices in corporate governance.
In conclusion, Directors Service Agreements are an essential tool for ensuring clarity and protection for both the director and the company. If you are a director of a company in New Zealand, it is important to have a comprehensive agreement in place that sets out your duties, obligations, and expectations.