Director of Companies Act

Director of Companies Act

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  DIRECTOR PRESENTED BY: UMANG MAHESHWARI
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  MEANING OF DIRECTOR •SECTION 2(34) • A director is one of those persons, who are responsible for directing, governing and controlling the policy or management of a company. All directors collectively are called as Board of Directors or Board. • They are the top administrative organ and the company can operate only through them. They are the brain of the organization responsible for all policy making and decision making activities.
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  Powers of theBoard of Directors • Section 179 • Powers of the Board of directors shall be exercised only by means of resolutions passed at meetings of the Board, namely-  to make calls on shareholders in respect of money unpaid on their shares  to authorise buy-back of securities under section 68  to issue securities, including debentures, whether in or outside India  to borrow money  to invest the funds of the company  to grant loans or give guarantee or provide security in respect of loans
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  to approve financialstatement and the Board’s report to approve amalgamation, merger or reconstruction to take over a company or acquire a controlling or substantial stake in another company to appoint or remove key managerial personnel (KMP) to take note of appointment(s) or removal(s) to appoint internal auditors and secretarial auditor to take note of the disclosure of director ’s interest and shareholding to buy, sell investments held by the company , constituting five percent or more of the paid–up share capital and free reserves of the investee company to invite or accept or renew public deposits and related matters to approve quarterly, half yearly and annual financial statements or financial results as the case may be.
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  DUTIES OF DIRECTOR Thefollowing duties and liabilities have been imposed on the directors of companies, by the Indian Companies Act of 2013, under its Section 166: --- • A director of a company shall act in accordance with the Articles of Association (AOA) of the company. • A director of the company shall act in good faith, in order to promote the objects of the company, for the benefits of the company as a whole, and in the best interests of the stakeholders of the company. • A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment. • A director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company. • A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company. • If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one Lakh Rupees but which may extend to five Lac Rupees.
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  Number of Directorsin a Company • Section 149(1) of the Companies Act, 2013 requires that every company shall have a minimum number of 3 directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company. • A company can appoint maximum 15 fifteen directors. A company may appoint more than fifteen directors after passing a special resolution in general meeting and approval of Central Government is not required. A period of one year has been provided to enable the companies to comply with this requirement.
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  APPOINTMENT OF DIRECTORS Section152 -First Director • The first directors of most of the companies are named in their articles. If they are not so named in the articles of a company, then subscribers to the memorandum who are individuals shall be deemed to be the first directors of the company until the directors are duly appointed. In the case of a One Person Company, an individual being a member shall be deemed to be its first director until the director(s) are duly appointed by the member in accordance with the provisions of Section 152
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  General provisions relatingto appointment of directors 1. Except as provided in the Act, every director shall be appointed by the company in general meeting. 2. Director Identification Number is compulsory for appointment of director of a company. 3. Every person proposed to be appointed as a director shall furnish his Director Identification Number and a declaration that he is not disqualified to become a director under the Act. 4. A person appointed as a director shall on or before the appointment give his consent to hold the office of director in physical form DIR-2 i.e. Consent to act as a director of a company. 5. Articles of the Company may provide the provisions relating to retirement of the all directors. If there is no provision in the article, then not less than two-thirds of the total number of directors of a public company shall be persons whose period of office is liable to determination by retirement by rotation and eligible to be reappointed at annual general meeting. Further independent directors shall not be included for the computation of total number of directors. At the annual general meeting of a public company one-third of such of the directors for the time being as are liable to retire by rotation, or if their number is neither three nor a multiple of three, then, the number nearest to one-third, shall retire from office. The directors to retire by rotation at every annual general meeting shall be those who have been longest in office since their last appointment.
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  Disqualification of Director Section164 • A person shall not be eligible for appointment as a director of a company, if - • he is of unsound mind and stands so declared by a competent court; • he is an undischarged insolvent; • he has applied to be adjudicated as an insolvent and his application is pending; • a person who has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence; • if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director in any company; • an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force; • a person who has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call; • a person who has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or • a person who has not obtained director identification number.
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  Removal of director Section169 • A company may, remove a director except the director appointed by National Company Law Tribunal u/s 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard after passing the ordinary resolution. • A special notice shall be required of any resolution, to remove a director under this section, or to appoint somebody in place of a director so removed, at the meeting at which he is removed.
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  Key Terms • DIRECTORIDENTIFICATION NUMBER (DIN) Section 153 • Ordinary resolution: In business or commercial law in certain common law jurisdictions, an ordinary resolution is a resolution passed by the shareholders of a company by a simple or bare majority (for example more than 50% of the vote) either at a convened meeting of shareholders or by circulating a resolution for signature.