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Directors of The Company

This document provides information about corporate law and the duties of directors from Chandigarh University. It defines what a director is, discusses the different types of directors like executive, non-executive, and whole-time directors. It also outlines the number and appointment of directors, their position as agents and trustees of the company, and their fiduciary duties to act honestly and in the best interests of the company. The duties of directors include care, skill and diligence, disclosing conflicts of interest, attending board meetings, and not improperly delegating their responsibilities.

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39 views

Directors of The Company

This document provides information about corporate law and the duties of directors from Chandigarh University. It defines what a director is, discusses the different types of directors like executive, non-executive, and whole-time directors. It also outlines the number and appointment of directors, their position as agents and trustees of the company, and their fiduciary duties to act honestly and in the best interests of the company. The duties of directors include care, skill and diligence, disclosing conflicts of interest, attending board meetings, and not improperly delegating their responsibilities.

Uploaded by

vaibhav
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CHANDIGARH UNIVERSITY

UNIVERSITY INSTITUTE OF LEGAL STUDIES


LAW( Legal studies)
Corporate Law I
LLT 316
SUMIT SHARMA

CLASSIFICATION OF COMPANY DISCOVER . LEARN . EMPOWER


Prepared BY= SUMIT SHARMA
Course Outcome
CO Number Level
CO1 Students will understand and get to Understand 
know about the provisions relating to
company

CO2 Students will be able to understand the Understand


 
formation of company.
CO3 The students will analyze the Understand
governance of the company.

Prepared BY= SUMIT SHARMA


Prepared BY= SUMIT SHARMA
Definition of Directors

• Definition:- As per Section 2(34) of Companies Act 2013 Director


means a director appointed to the Board of a Company.
• According to Sec. 2 (13) of the Companies Act., “Director includes any
person occupying the position of director by whatever name called.”
• According to Sec. 2(30), “A director is the officer of the company.”
• According to Sec.303 Explanation (1), “Any person, in accordance with
whose directions or instructions, the Board of Directors of the
company is accustomed to act, shall be deemed to be director of the
company.”

Prepared BY= SUMIT SHARMA


Number of Directors:Section 149(1)

In public In private
In one person
company three company two
company
directors directors
minimum ONE
minimum minimum
DIRECTOR
required required

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Maximum number of directors

A company can
appoint maximum
15
fifteen directors.
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Types of Directors:-
Residential
Director:

Alternate Independent
Directors:- Director: 

Small
Additional
Shareholders
Directors:-
Directors:
Women
Director

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Types of Directors

• Residential director – according to Section 149(3) of the Companies Act, 2013, each
company shall have a director who Types of
• Residential director – according to Section 149(3) of the Companies Act, 2013, each
company shall have a director who has remained in India for 182 days or more.
• Independent director – According to Section 149(6), an independent director is an
alternate director other than a Managing Director/Whole Time Director/Nominee
Director. As indicated by Rule 4 of Companies Rules,2013 (Appointment and
Qualification of Directors) these are the following type of companies which have to
appoint a minimum two independent directors:
a.) Public Companies which have a turnover of Rs.10 Crores or More;
b.) Public Companies which have revenue of Rs.100 Crores or More
c.) Public Companies which have total outstanding loans, debenture, and deposits of
Rs. 50 Crores or More.
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CONTD.
• Additional Directors – Any Individual can be delegated as Additional Directors by a
company under Section 161(1) of the Companies Act, 2013.
• Alternate Directors – As per Section 161(2), a company may appoint an alternate
director if the articles present such power on the company or a resolution is passed
(if a Director is absent from India for at least three months). There are some
conditions also, like;
a.) An alternate director cannot hold the office longer than the term of the director.
b.) An alternate director has to vacate the position immediately when the original
director returns.
• Nominee Directors – They can be chosen by individual stakeholders, third parties
through contracts, lending public financial institutions or banks, or by the Central
Government in case of oppression or mismanagement.

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Executive and non executive directors

• Executive Director
• An executive director is a member of a board or firm who is also an
employee of the company and has management responsibilities.
Executive directors have executive responsibilities for running the
company’s day-to-day business activities. They’re usually a senior
executive or a board member.
• Chief Executive or director, by whatever name called, of any nonprofit
organisation that receives twenty-five per cent. or more of its receipts
from the company,

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Non executive
• Non-Executive Directors
• A non-executive director is not an owner or a member of the family of
a corporate owner. Professional advisors aren’t necessarily non-
executive directors; however, professional advisors who are officially
appointed as board directors may provide professional advice as a
non-executive director who is also a skilled professional

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Whole-time Director
• Whole-time Director [Sec 2(94)]
• Meaning of the term ‘whole-time director’ “Whole-time Director”
has been defined to include a director in the whole-time employment
of the company. The definition of ‘whole-time director’ is an inclusive
definition. A whole-time director refers to a director who has been in
employment of the company on a fulltime basis and is also entitled to
receive remuneration.

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Prepared BY= SUMIT SHARMA
Appointment of the Board of Directors

• If there is no provision for appointment of Director in the Articles of


the company, the subscribers to the memorandum that are the
shareholders shall be deemed to be the first directors of the company
until the directors are duly appointed. (in the one-member company,
an individual is a member in Accordance would be its first director)
• Director is appointed by the general meeting. If it is done in this way,
a statement for such appointment, annexed to the notice for the
general meeting, shall include a statement that according to the
Board, he accomplishes the conditions specified in this Act for such an
appointment

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CONTD.
• The proposed Director has to furnish his DIN (Director Identification
Number) mandatorily. DIN is allotted by the Central Government on
application by a person intending to be the Director of a company. DIN
can be obtained in pursuance of Section 153 and 154 of the 
Companies Act, 2013.
• The proposed Director has to furnish a declaration stating that he is not
disqualified to be a director.
• Furthermore, such appointment ought to be with his permission. Before
the new Companies Act, 2013 such consent was not obligatory for private
companies. Consent has to be filed with the Registrar of Companies
within 30 days of appointment
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Position of directors
• Directors as agents
• a company, as an artificial person, acts through directorswho are
elected representatives of the shareholders. They are, in the eyes
of thelaw, agents of the company for which they act-
• Ferguson v Wilson
The generalprinciples of the law of principal and agent regulate in most
respects therelationship between the company and its directors

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Position of directors
• Directors as servants
• they are not servants of the company. A director may,however,
become a servant in a different capacity. For example, the creatorand
controller of an air farming company was also working as its pilot. He
died
• in an accident. His widow was allowed workman’s compensation ( Lee
v Lee’sFarming Ltd.)

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Position of directors
• Directors as officers
• a director is an officer of the company. As such they areliable to certain
penalties if the provisions of the Companies Act are not strictly complied with.
•  Director as trustees
•  Directors as trustees of the company’s money and property
• Trustees of the company
• -directors are trustees for the company and not for the thirdparty who have
made contracts with the company or for the individual shareholders

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Duties of the Directors

• Fiduciary duties
• -as fiduciaries, the directors must-
•  exercise their powers honestly and bona fide for the benefit of the
company as a whole; and
• not place themselves in a position in which there is a conflict between
their duties to the company and their personal interests. They must
not make any secret profit out of their position. If they do, they have
to account for it to the company.

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Duties of the Directors
Duties of care, skill and
diligence

Duty to disclose interest 

Duty to attend board


meetings

Duty not to delegate

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REFERENCE
Text Books

Company law with supplement by Avtar Singh


Company Law Ready Reckoner by R Suryanarayayan
Corporate law containing Company’s Act, 2013 by Ravi Puliani
COMPANY LAW BARE ACT 2013
COMPANY LAW BY AVTAR SINGH

Prepared BY= SUMIT SHARMA


THANK YOU

Prepared BY= SUMIT SHARMA

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