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Directors – Appointment, Duties, Rights, Liabilities – Company Law

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A director is the member of the Board of Directors. all the latest updates!

“Director means a director appointed to the board of a company” sec 2(34)

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According to the companies act states the board of directors in relation to a
company refers to a collective body of the directors of the company. Sec 2(10) Subscribe Now

Meaning of Director We don't spam. We Educate.

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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
Advertising Management (20)
are called as Board of Directors or Board. They are the top administrative organ
Articles (238)
Banking and Insurance (10)
and the company can operate only through them. They are the brain of the Blog (19)
organization responsible for all policy making and decision making activities. Business & Entrepreneurship (6)
Business Communication (15)
Business Environment (21)
Business Ethics (1)
Business Law (1)
Appointment of Directors
Business Statistics (49)
Company Law (14)
Computer Applications (9)
The following guidelines have been established by the companies act regarding Consumer Behaviour (33)
the appointment of directors. Cost Accounting (3)
E-commerce (8)

The articles of a company may list the names of the first directors in its articles Entrepreneurship (11)

of association, if no names are mentioned in the articles, the subscribers of the Financial Accounting (2)

memorandum become the first directors. Financial Management (23)

Financial Services (19)
Directors can be appointed by the initial members of the company at its first Human Resource Management (21)
general meeting. Income Tax (2)
A company may appoint an additional director if it needs. International Business (13)
An Alternate Director may be appointed by the board during the absence of a Investment Analysis & Portfolio Management (9)
director for a period not less than 3 months IT & Technical Skills (5)
A vacant position of director can be filled by the members of the board on Macro-Economics (10)

temporary terms. Management Accounting (5)

Management Information System (4)
Nominee Director – It refers to any person nominated as director by a financial Managerial Economics (2)
institution or a government body who holds shares in the company. He must be Marketing & Advertising (7)
appointed by the company. Marketing Management (18)
Marketing of Services (6)
On complaint against oppression or mismanagement in a company, the tribunal Micro-Economics (2)
may order the company to appoint the required number of directors as directed Operations Management (2)
by the Tribunal. Organizational Behaviour (7)
A director may be appointed by the central government under certain Personal Finance (2)
circumstances. Principles of Management (9)
Project Management (11)
 A director may be appointed by a single transferable vote system or cumulative Projects and Presentations (35)
transferable vote system Public Finance (11)
Research Methodology (9)
Rural Marketing (1)
Strategic Management (14)
Powers of Directors
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Statutory Powers of Directors Authority of India
April 1, 2018
Powers must be exercised by Board of Directors in the general meeting of the
company by passing a resolution. Learning Theories – Cognitive, Conditioning,
Social Learning Theories

The power to make call on shares in respect of unpaid money. March 31, 2018

The power to authorize lack of shares

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The power to issue debentures, whether in or outside india.
March 27, 2018
The power to invest in funds
The power to borrow money otherwise than on debentures
Inventory, Inventory Control – Theory Notes
The power to make loans or give guarantee in respect of loans. But a banking
January 13, 2018
company does not require any resolution by the board.
The power to approve the financial statement and board’s report.
The power to diversify the business of the company. Organization Design – Types of Organization
Structure
The power to approve amalgamation, merger or reconstruction.
January 2, 2018
The power to take over a company or acquire a company or substantial stake in
another company. Marketing Information System – Components,
Importance
Other powers – December 20, 2017

Power to fill casual vacancy 9sec 161) Budget, Budgeting, Budgetary Control
December 20, 2017
Power to appoint the first auditor of the company
Power to make political contribution.
Power to appoint alternate directors. (sec 161) Resistance to change – Levels, Overcoming Resistance

Power to appoint additional directors. (sec 161) December 18, 2017

 Power to declare interim dividend. ( 123(3))
Power to appoint or remove key managerial personnel (KMP)
Power to declare solvency , where the company winds up voluntarily.
Power to recommend the rate of dividend on the shares of the company Decision Making – Types, Process, Techniques,
Importance
subjected to approval by shareholder of the company
December 18, 2017

Powers only with a resolution –

In ation Accounting – Meaning, Techniques –
Short Note
To sell or lease any asset of the company December 12, 2017
To allow time to the director for the repayment of the loan
To borrow money in excess of paid up capital and free reserves
To appoint a sole agent for more than 5 years LATEST PROJECTS
To issue bonus shares and for reorganization of share capital
To contribute money for charitable purposes exceeding Rs. 50,000 or 5% of the Apparel Industry – Pantaloons- Analysis,
Marketing & Product Development
average profits of 3 years whichever is greater

Managerial powers of Directors Situational Analysis of Apparel Industry in India

The Board acts in the interest of shareholders with the following powers –
Effectiveness of Recruitment and Selection
Power to contract with the third party system
Power to recommend dividend
Power to allot, forfeit or transfer shares of company
Sales Promotion Activities of Automobile
Power to take decision regarding terms and conditions for the issue of Industry in India
debentures
Power to form policy and to issue instructions for the efficient running of the
Consumer Behaviour Solved Case Study Matin
business Khan
Power to appoint Managing Director, Manager, Secretary of the company.
Power of control and supervision of work of subordinates
Home Automation – Advertising Management
Project

Duties of Directors
 Impact of Demonetization on Central Bank (RBI)
Autonomy in India

General Duties of Directors.

Internship Project Report: Customer Service Max
To form policy and determine objectives of a company Retail
To delegate power to any committee if the Articles permit
To issue instructions to subordinates for the implementation of policy to review
Project Report: Impact of Lucknow Metro on
company’s progress Transportation System
To appoint their subordinate officer, managing director, Manager, Secretary,
other employees
Dupont Analysis with Example
To act in accordance with the Articles of the company providing that articles are
subject to the provisions of this Act. (sec 166(1))
To act in Good faith in order to promote the objects of the company. However
the promotion of the objects should be for the benefit of the company.
To perform duties with Due and reasonable care and Diligence.
Duty to not to achieve or attempt to achieve any undue gain or advantage either
to himself or to his relatives.

Speci c Duties of Directors

Must disclose his shareholding in a company.
Must disclose his interest in contracts of the company
Must disclose their name, address and occupation
Duty to take up qualification shares within 2 months after his appointment
Decide the minimum subscription and issue prospectus. It must not contain any
false or misleading statement
The Board of Directors or requisition must be ready to call on an extraordinary
general meeting
Duty to call statutory and annual general meeting of the company
To ensure full and correct disclosure in prospectus of all matters as required by
law.
 To sign the prospectus before it has been delivered to the Registrar.(sec 26)
To deliver the prospectus to the Registrar before the prospectus is issued to the
public.
To deposit application money in a scheduled Bank. They shall not utilize money
other than purposes mentioned in the Act.
To file Return of Allotment of securities with the Registrar.
To declare dividend and arrange for the payment
To file with registrar the reports and resolutions as required by the act.
To issue forfeit and transfer shares
To perform all other duties as assigned by the Act

Liabilities of a Director

Liability against Company

The directors will have to make good for any loss on account of –

an ultra vires act where the directors have entered into a contract beyond their
powers. In such case directors are personally liable for the loss caused to the
company.
breach of trust where the directors make a secret profit out of the business
for negligence or for not performing his duties honestly and carefully
For dishonest act to make personal profits
For the activity of the co-directors

Liability toward 3rd parties

The directors will be personally liable towards the 3rd parties –
 For any mis-statement in the prospectus for acting fraudulently, the directors
shall be liable to pay compensation to every person who subscribe for shares
on the faith of such prospectus.
For the failure to repay application money on non- receipt of minimum
subscription.
Failure to repay Application money on refusal to list shares by the stock
exchange.
For acting in their own name without mentioning the name of the company
For acting beyond the powers of the company
When the liability has been made unlimited by the Memorandum
For any liability at the company at the time of winding up

Criminal liability of Directors

Will be liable with a fine and imprisonment or both for fraud of non-compliance of
any statutory provision.

For mis-statement in prospectus

Failure to file return on allotment with the registrar
Failure to give the notice to the registrar for conversion of share into stock
Failure to issue share certificate and debenture certificate
Failure to maintain register of the members and register of debenture holders
Default is holding Annual General Meeting
Failure to provide Annual accounts and Balance Sheet
For holding the office of director in more than 15 companies

BY: BBAMANTRA / IN: ARTICLES, COMPANY LAW / WITH: 5 COMMENTS

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5 Comments on "Directors – Appointment, Duties, Rights, Liabilities – Company Law"

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archana  

how can I copy alll matters

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 4  Reply  5 months ago

archana  

hi i want to copy the matters . but it can’t happen. How can I do it?
Guest

 0  Reply  5 months ago 

bbamantra  

Author To protect our content from misuse, we do not allow users to copy or download
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 -3  Reply  5 months ago 

suraj mal  

Guest are you idiot, who can misuse your content, can it be used in making a
bomb or something to damage public property, such a bulshit

 0  Reply  20 days ago

Rahul  

I want types of director

Guest

 0  Reply  26 days ago

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