Question

State whether the following statement is true.

The director of a company must be a shareholder.

Answer 1

This statement is false.

Explanation:

A company director does not legally have to be a shareholder because management and ownership are completely separate in a corporate structure. Directors are professionals elected for their expertise to manage the company, while shareholders are the owners who invest capital. Unless the company’s own internal rules (Articles of Association) specifically require a director to hold “qualification shares,” any qualified individual can be appointed to the Board of Directors without owning a single share in the company.