(TRIAL BALANCE). Yet it is important to modem OWNER-MANAGED businesses. · . To discover and appreciate the existence and importance of this source of.
........................................... DIRECTORS' CURRENT ACCOUNT: THE NON-CONVENTION INVISIBLE SOURCE OF FINANCE,.
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Tammy Ngerebo INTRODUCTION tudies- in Financial Management, · Accountancy and Busin~ss Administration over the years have concluded that it is true to say, "for a business organisation to operate, it needs funding as the second most important requirement after the entrepreneur". Common sense will put it that without money, nothing can be achieved. These studies considered that the conversion of every busine~s idea to a mission and to reality requires the smallest of funds from the vision (idea) carrier, at least. By this, the idea to invent electric bulbs for instance needed costs to be borne in the procurement of materials for experiments. These funds are basic components even when the inventors personal monies are exhausted, hel}ce the co-opting of some other person(s) ipto the production process.
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The a:bove example means that there are conventionally two sources of funding (financing) available to every business entity. These sources are the Internal and the External sources. But, there is yet another source of finance which · is not too visible and/or non-negotiated. One such nonnegotiated, non-contractual, seemingly invisible source of finance . is Directors' extra-ordinary contributions called DIRECTORS' CURRENT ACCOUNT (DCA). Most times, this account is not found among the list ofbalances of account. (TRIAL BALANCE). Yet it is important to modem OWNER-MANAGED businesses. · . To discover and appreciate the existence and importance of this source of funding, this paper has been _split into the following areas: a. The Director( s) b. ·source of Financing c. Director's Current Account d. How DCA Finance Operations e. Conclusion THE DIRECTOR A director is someone that oversees a process or adion within certain lines of instructions with the aim of producing expected/acceptable beneficial results. By this definition, we have Directors of Programmes, Directors of
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.......................................... documentaries, Director of operations, Company Directors, etc. Our concern is company directors. By general practice and the various company laws, a company director is someone that manages the affairs of the finn and/or occupying the position of a director . (section 650, COMP ANY AND ALLIED MATTERS DECREE, 1990). This means that ariybody. who rilanage::. ~ .. directs the operations (generally or specifically) is a DIRECTOR(S) and this person(s) could be acquired, appointea, elected or just owners/initiators of finns. Hence, we hear of names like Managing Director (MD), Executive Directors (ED), Directors, etc. The director may not have any stake in the fin11 to be appointed as one. In this case, he represents the stakeholder. This makes him have double allegiance to the stakeholder he represents and to the company (S. 279, CAMD). Again by this airnngement, the director acts just as an agent or trustee to the stockhotder: A Director so appointed as in this latter case has no financiaf commitnient in the fim1. However, directors can be elected through QUALIFICATION _SHARES properly filed with the Corporate Affairs Commission (CAC). Such shares must be taken up (subscribed and fully paid) within two (2) months of election. When this happens, the director becomes a financial member of the company and so enjoys the benefits of promoters a_nd other shareholders. On the other hand, Directors can be elected. By election we mean that the shareholders agree to make a fellow-stakeholder, a director. This makes such ·elected Dir~ctor to have a TRUSTEJ;: duty to perfom1 while he still executes the AQENCY duties that a director nom1ally perfonns. By the Trustee dl1ty, the responsibility of proper management of the firm is entrusted to the Director(s) and tli._ey are expected to perfom1 tl;eir duties with Honesty and Utmost Good Faith (Uberimei Fidei) (S. 279). Because the director is an _existing shareholder, he has financial involvement. Most directors of fairly new firms have automatic election I qualification by virtue of their being PROMOTERS, eve·n though re-election is a matter of an Annual General Meeting resolution by n::gistered and/or existing shareholders. Sometimes, election is based
