It has been Amendmended in 2002 and 2006 Section 3(1)(i) of the Companies Act 1956 defines a company as : “A company means a company formed and registered under this act or an existing company.” Company is Defined as “a voluntary incorporated association which is an artificial person , created by law with limited liability having a common seal and perpetual succession” If an association is not incorporated under companies act ,it becomes illegal association .
Registration Distinct person- separate legal personality Perpetual succession Artificial person Transferable shares Limited liability Common seal Separate Property Capacity to sue and be sued
Royal Charted CompanyStatutory CompanyRegistered CompanyCompany Ltd SharesCompany Ltd by GuaranteeUnlimited Company
The company being and artificial person carries on its activities and Business through individuals called directors [Sec.2(13)] Every company has atleast 2 directors Maximum permissible limit of directors is 12 .where the number of directors Fall below the maximum number the remaining directors cannot act
Under Sec253 and 266A to 266G DIN means director identification number which the central government May allot to any individual intending to be appointed as a director or to Any existing director of a company for the purpose of his identification An individual has to apply to the central government for allotment of DIN Any individual cannot be given two DINS
Directors shall be appointed in the General Meeting by theCompany Retiring director or a person other than retiring director can beappointed as a Director of the company At a general meeting of a public or a private company a motionshall not be made For two or more directors
Share qualification means the share to be taken by the director to qualify him As a director of the company It is duty of every director to hold a specified share qualification The act however does not prescribe any share qualification
No person shall hold the office at the same time as a directors in more than15 companies Under Sec 285Exceptions: A private company which is neither a subsidary nor a holding company of a Public company An unlimited company Not profit organization A company in which such person is only an alternative director
By Shareholders Under Sec 284 A company may buy ordinary resolution to remove the director (not being a Director appointed by the central government ) before the expiry of his period of OfficeExceptions: Director appointed by the central government In case of the private company director holding office for life as on 1.4.1952
Central government under following circumstances may remove a director If a person is found guilty of fraud of default in carrying Out in duties Action of a person is likely to cause or has caused serious Injury to the industry and trade
On application by any member of the company in case of Oppression or mismanagement the company law board mayremove a director No director can be appointed if he is terminated till 5years
Office of the director shall become vacant if…… He is found to be of unsound mind He is absent for three consecutive board meetings If he fails to disclose the information in respect to contract he is interested If he becomes insolvent He fails to obtain share qualification within 2 months If he is convicted by court for any offence
In the meeting resolution for the re-appointment of the director has been put to the meeting By a notice in writing addressed to the company or its board of directors ,expressed his Unwillingness top be re-appointed . He is not qualified or disqualified from appointment. A resolution, whether special or ordinary, is required for his appointment or reappointment Where a resolution for the appointment of two or more director by a single resolution Is passed (sec.256).
Board of directors has following powers :1) To call shareholders in respect of unpaid money on their shares .2) To issue debentures3) To make loans.4) To invest funds of company.
1) Act honestly.2) Attend board meetings .3) Pay call amount.4) Must not make secret profits.5) Disclose his name ,occupation and nationality.6) Obtain share qualification wherever necessary.
1) He cannot assign his office or delegate his functions2) He cannot take any loan from the company except with prior approval of central government wherever applicable .3) He cannot hold any place of profit in the company without the consent of the company by special resolution.
The directors are also liable to pay compensation in following cases :1) For untrue statement in prospectus .2) For contracts entered into on behalf of the company where directors act in their own name.3) For irregular allotment of shares .4) Where directors act unlawfully.
1)Directors as agent2)Directors as trusties .3)Directors as managing partners.4)Directors as employees .