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Points covered:
Director
Appointment Power Duties Responsibilities Liabilities
by:-Sudeep Kumar,Dhoulath Khan,Manjunath,Siddesh,Dayanand
Introduction:
Shareholders own limited companies
but they don't run them. That job is given to the directors. For a Public limited company there should be a minimum of 3 directors [sec.252(1)] All Private limited companies must have at least 2 directors[Sec.252(2)]
by:-Sudeep Kumar,Dhoulath Khan,Manjunath,Siddesh,Dayanand
CONTINUED
The director, or directors, must
manage the company's affairs in accordance with its articles of association and the law. The directors of a company collectively are referred to in this Act as the " Board of directors " or " Board ".
by:-Sudeep Kumar,Dhoulath Khan,Manjunath,Siddesh,Dayanand
20 companies.(Sec.275) In case if a person who holds the directorships of 20 companies and is appointed in another company, he has to vacate in one of the company within 15 days of his appointment.
Appointment of Director
By articles as first director
Sec.254 By the company in General Meeting Sec.255 to 257,263,264 By the director By third parties Sec.255 By the principle of proportional representation Sec.265 By the Central Government Sec.408
by:-Sudeep Kumar,Dhoulath Khan,Manjunath,Siddesh,Dayanand
subject to any regulations in the articles of the company, also be appointed by the company in general meeting.
appointment or re-appointment(sec.256) If a new director is to be appointed, a notice by him or some member intending to propose him in writing should be given to the company at least 14 days before the meeting
by:-Sudeep Kumar,Dhoulath Khan,Manjunath,Siddesh,Dayanand
Cont
The company must inform the members at least 7 days before the meeting (Sec.257) Appointment of Directors of a public company ,must be done individually by separate ordinary resolution(Sec.263) Every person proposed as a candidate for the office of a Director must sign and file with the company his consent in writing to act as a Director if appointed(Sec.264)
years and interim casual vacancies must be filled in the manner provided in the Articles(Sec.265) If the Company Law Board specify as being necessary to effectively safeguard the interest of the company, its shareholders or the public(Sec.408)
Powers
General powers of the Board->Sec.291:
The BOD of a company is entitled to exercise all powers and to do all acts and things which the company is authorized to exercise and do. Powers to be exercised only at meeting-> Sec.292: Following powers must exercise on behalf of the company by means of resolutons passed at the board:-
make calls on shares issue debentures borrow money invest the funds of the company make loans
duties:
Directors occupy a key position in the
management and administration of a company. Their duties are usually regulated by the Articles of the company His duties are classified into 3 types
Cont
The general duties are as follows:-
(iii)Other duties.
(i)Fiduciary Duties
It is basically identical with those of any person in a Fiduciary position. They must exercise their powers a. Honestly, b. In the interest of the company and shareholder. They should not place themselves in any conflict between their duties of the company and their personal interests.
by:-Sudeep Kumar,Dhoulath Khan,Manjunath,Siddesh,Dayanand
The standard of care, skill and diligence would ,however, vary with->type and nature of work; ->division of power between directors and other officers; ->general usages and customs of that type of business; and ->whether directors work gratuitously or remuneratively.
by:-Sudeep Kumar,Dhoulath Khan,Manjunath,Siddesh,Dayanand
extent authorized by the Act or the constitution of the company, and 3. To disclose his interest.
Liabilities of directors
Liability to third parties,
I.
Liability of Director to the third parties may arise in connection with the issue of prospectus which does not contain the particulars required by the Act, or which contains material misrepresentations. They may also incur such liabilitya. where they fail to repay application money if minimum subscription has not been subscribed[Sec.69(5)]
by:-Sudeep Kumar,Dhoulath Khan,Manjunath,Siddesh,Dayanand
Removal of Directors:
1. Shareholders
2. Central Govt
Sec 284
Sec 388-B to 388-E Sec 402
References:
Indian Companies Act,1956 N.D.Kapoor , Sultan Chand & Sons