Directors
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Directors Presentation Transcript

  • 1. Directors
  • 2. Definition of directorSection 2(13) defines a „director‟ as including “any person occupyingthe position of director by what ever name called”Legal position of directorsCompanies act makes it obligatory for all the companies to havedirectorsThe true position of company directors is that of agent andprincipalThey have principal and agent relationshipSingle director have no authorityIf directors contract on behalf of Co. without using the wordLimited / Pvt. Ltd he is personally liable
  • 3. Types of directorInside director or executive directorOutside directorProfessional directorNominee directorSpecial directorIndependent directorInterested directorManaging director
  • 4. Director Identification Number(DIN)Sections 266A to 266G of companies act contain theprovision for DINAll existing directors and individual intending tobecome directors have to obtain DIN with in prescribetime frame and in manner as prescribedCentral government has prescribed directoridentification number rules, 2006, governing directoridentification number
  • 5. Who can be a director?Anyone can become a director, with a fewexceptions:Anyone disqualified by the company‟s ownArticles of Association (the rules relating tothe running of the company).An undischarged bankrupt.Someone disqualified by a court order.The company‟s auditor
  • 6. Qualification sharesNo statutory requirementAoa may provide for qualification sharesQ/S should obtain within 2 months fromappointmentMaximum nominal value of shares not to exceedRs.5000Q/S should be bought and not to take in gift
  • 7. Number of directors (sec.252)Public ltd company shall have at least 3 directorsEvery Pvt company shall have at least 2 directorsMaximum No of directors 12 (Sec 259)>12 central Govt permission is requiredRestriction of Number of directorships (sec.278)Maximum number of directorships 15 following are excluded from count (Sec 278)•Directorship in unlimited company•Directorship in non profit organization
  • 8. Appointment of directorsBy subscribes to the memorandum(first directors)section 254By members of general meeting section 255,256,257,256By board of directors section 260,262• additional directors•Directors in casual vacancy•Alternate directorsBy central government section 408,409By third parties if the articles provideBy small shareholders if articles provide
  • 9. Removal of directorsRemoval by shareholdersShareholders may remove by passing ordinary resolutionThe following directors cant be removed buy SHo directors appointed by central govtoLife time directors appointed prior to 1-4-1956oAppointed by Financial institutions and banksRemovable by central government• if director is guilty of fraud misfeasance negligence• the business is conducted with unsound businessprinciples
  • 10. Removal by company law board• it has power to terminate, modify any agreementsbetween company and director•Director cant sue for any compensation for loss oftermination of office•Such person cant serve any company for a period of 5years
  • 11. Resignation of directorsCompanies act does not make express provision forresignation of a directorA director may resign in a manner according to thecompany articles.If the articles contain no provision regarding theresignation by a director ,he may resign his office atany time by giving reasonable notice to the company.
  • 12. Remuneration of directorsDirectors are not entitled to remuneration unlessagreement is madeBut company can pay them salary or commission orspecified percentage of net profitReference to section 198,309to 311 and 387 suggestsdirector can get managerial remunerationSitting feesIt is not a part of remuneration (Section 198 (2)) it is paid to company which having paid up capital andreserves of Rs.10 cores or above.Up to Rs.20000 per meeting
  • 13. Duties of DirectorsStatutory dutiesDuties to attend board meetingDuty not to contract without board‟s consentDuty in connection with general meetingsTo disclose receipts transfer of propertyTo disclose receipt of compensation from transfer of sharesDuties to file declaration of solvencyFiduciary and general dutiesDuty of good faithNot to make secret profitsNot to be negligent
  • 14. Siddharthachitla