CABO VERDE LAW AND PRACTICE Contributed by: Nelson Raposo Bernardo, Joana Andrade Correia, Júlio Martins Júnior and Manuel Esteves Albuquerque, Raposo Bernardo & Associados
3.5 Independence of Directors The Commercial Companies Code enshrines some legal provisions that aim to highlight the need for markedly independent management of commercial companies and avoid conflicts of interest. Firstly, a general prohibition is established on com - mercial companies granting loans or any form of credit to their directors, providing guarantees for obligations assumed by them or providing them with advances on salaries exceeding one month. Furthermore, it was established that, unless expressly consented to by the General Assembly, transactions may only be concluded between: • the company and the director, in their own name, directly or through an intermediary; or • the company and the director, representing a third party, where the company is one in which the director per - forms management functions. These prohibitions remain in place in the year follow - ing the termination of duties by the director and are extended to transactions concluded with companies that are in a controlling or group relationship with the company in which the contracting party is a director. Furthermore, the Commercial Companies Code establishes that during the period for which they are appointed or elected, directors cannot exercise, in the company or in companies that are in a controlling or group relationship with them, any temporary or perma - nent functions at the same time, under an employment or service-provision contract, or regarding entering into any such contracts aimed at providing services when a director’s duties cease. When someone who is linked to the company by an employment or ser - vice provision contract is appointed or elected as a director, this contract is suspended and only resumed immediately after the termination of duties. Unless express authorisation is given at a general meeting, the director cannot carry out, on their own behalf or on behalf of others, activities competing with those actually carried out by the company, nor can
The articles of association may establish that, for a number of directors not exceeding one, two or three, depending on whether the total number is three, five or more than five, an isolated election is carried out, between persons proposed on lists subscribed by groups of shareholders, as long as none of these groups has shares representing more than 20% or less than 10% of the total share capital. Removal Any member of the board of directors may be removed by resolution of the general meeting, at any time. One or more shareholders holding shares correspond - ing to at least 10% of the share capital may, until a general meeting has been called to deliberate on the matter, request the judicial dismissal of a director, based on just cause. In particular, serious breach of the administrator’s duties and their inability to carry out their duties nor - mally constitutes just cause for dismissal. Resignation Any director may resign from the exercise of their duties, by means of a written document addressed to the chairperson of the board of directors. The resigna - tion only takes effect 30 days after it is communicated, unless, in the meantime, a replacement is designated or elected. Resignation without just cause must be communicated within a reasonable period of time. Restrictions Under the Commercial Companies Code, direc - tors must generally be natural persons with full legal capacity and are not required to be shareholders of the company. However, in the case of public limited companies ( Sociedades Anónimas ), a corporate entity can be appointed as a director as long as it designates a specific natural person to exercise the functions on its behalf. Furthermore, there is a strict non-compete restriction which dictates that directors cannot engage in activities that compete with the company, either on their own behalf or for a third party, unless they receive explicit prior authorisation from the shareholders.
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