legal aspect of business law

1. Directors
sections 149- 172

2. Directors
• Directors are persons in charge of
management of business of company
• Only individuals can be Directors

3. No of Directors
• Public co – Min 3
• Private co – Min 2
• One Person co - 1
• Maximum – 15, more than 15 by spcl resln

4. No of Directors
• Woman Director – 1 in specified cos
• Resident Director- 1 in specified cos
• Independent Director – 1/3 rd in listed
companies

5. Director Identification Number
• DIN essential for appointment as Directors
• Application to CG for DIN to be filed
• Director to inform DIN to company
• Company to inform DIN to ROC
• Two DIN not permissible

6. Appointment of Directors
• First Directors
• Subsequent Directors
• Supplementary Directors

7. First Directors
• As per procedure in AOA
• If not, subscribers to MOA become Directors
• To be appointed at first AGM
• Director to give consent before appointment
as Director – to be filed with ROC

8. Subsequent Directors
• Elected by shareholders at AGM
• 14 days notice for appointment to be given

9. Rotation of Directors
• 2/3rd liable for rotation (excl Independent
Directors)
• 1/3rd retire at second AGM
• Retiring Directors eligible for reappointment

10. Additional Director
• Can be appointed if so authorised by AOA
• Person should not have failed in appointment
at earlier AGM
• Holds office till next AGM

11. Alternate Director
• Appointed by the Board as Director in place of
Director away from India for 3 months
• Holds office for balance term of original
Director
• Vacates office if original Director returns
• Alternate for ID if so qualified

12. Nominee Director
• BOD may appoint any nominee of Institution
as per law /agreement,

13. Casual vacancy
• Arises in case of death, resignation of Director
• BOD may fill up vacancy, if AOA allows
• Holds office till balance term of original
Director

14. Small shareholders’ Director
• Small shareholders – shares of Rs. 20,000
• Listed co may provide for it in AOA

15. Independent Director
• Other than MD, WTD, Nominee Dir
• Board considers him person of integrity with
expertise/experience
• Not related to promoters / Directors
• No pecuniary relations with company /
promoters/ Directors/ holding co/subsidiary in
current and last two years
• No relative with 2% of turnover

16. Independent Director
• Not held key management position, employee
in last 3 years
• Not been partner in audit firm, consultancy
firm that had dealings with co
• Not holds 2% voting power, with relatives

17. Independent Director
• Any change in status to be informed to co
• Term – 5 years, eligible for second term with
special resolution
• Third term after 3 years provided no
association with co in the interval

18. Disqualifications
• Unsound mind, insolvent
• Convicted for 6 months imprisonment and 5
years after
• Disqualified by court to be Director
• Not paid calls for 6 months
• Convicted for related party transc.
• Director in a co that not filed fin statements
for 3 yrs or defaulted in payments

19. Max no of directorships
● Max no of cos – 20
• Public cos – 10 (incl pvt cos which are holding
or subsidiary co of public co)
• Can be further reduced by special resolution

20. Board meetings
• 4 meetings in a year
• Not more than 4 months time in between two
meetings
• Directors can participate in person or by video
conferencing / audio visual means
• 7 days notice for meeting to be given

21. Quorum
• Means minimum no required for a valid
meeting
• One third Directors (non interested) forms
quorum
• If Interested Directors more than 2/3rd, Non
IDs makes quorum, if not less than 2

22. Board Decisions
• At regular meeting or by circulation
• Circulation – draft to be circulated
• Needs approval by majority for decision
• To be noted at next meeting
• 1/3rd Directors may require circulation item to
be considered at meeting

23. Board Committees
• Audit Committee
• Nomination and Remuneration Committee
• Stakeholders Relations Committee

24. Powers of Board
• Board authorised to do all acts that company
can do
• Except powers vested with shareholders at
General Meeting
• Following Powers only at meeting – call for
unpaid shares, Buyback, issue securities,
borrow, invest, grant loans, diversify business,
approve fin statements, M&As

25. Powers by special resolution at
GM
• Sell, dispose of undertaking
• Investment of amount recd from M&As
• Borrow in excess of paid up capital +free
reserves
• Remit any loan to Director