Power, function and duties of directors and.pptx

7/28/2019 Power, function and duties of directors and.pptx

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Power, function and duties ofdirectors and managing

director


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Director

A company in terms of law is an artificial person not a physical person. It can thereforeperform its actions through its agents or theperson nominated by it to perform suchactions.

The person who act on behalf of a companyare called its directors .


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Board of directors

According to section 252(3) of the act, thedirector of a company are collectively referredto as the Board of director or Board of thecompany .

The board of director plans the companys policy, control its management and makes allimportant decision..


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Number of the director

According to section 252 of the companies actevery public company, shall have at least 3directors and every other company shall haveat least 2 director.


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Qualification of director

The rule governing the appointment of directorsof a company are as follow:

1. Qualification shares: A director must acquire the qualification shares

within 2 months of his appointment as a director. The value of qualification shares shall not exceed

Rs. 5000. a director may not accept his qualification shares

as a gift from any person who has an interest inthe company.


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If the article of the company so permit a director of acompany may hold his shares jointly with any otherperson.

If after the expiry of the said period of 2 months anyperson acts as a director of the company when hedoes not hold the qualification shares he can bepunishable with a fine of Rs. 500 per day.

The above provision do not apply to a private

company which is not a subsidiary of a publiccompany nor do they apply to the director who havebeen appointed by central government.


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2. Written consent:According to sec 266, a person can be appointedthe director of a company when:

He has signed and filed with the registrar a consent inwriting to act as a director.

He has signed the memorandum for shares not beingless in number or value than his qualification shares.

He has taken his qualification shares from the

company and paid. He has made and filed with the registrar an affidavit

to the effect that the qualification shares areregistered in his name.


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3. Only individuals can be Director: No corporatebody, association or firm shall be appointeddirector of a company and only an individualshall be so appointed.


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Disqualification of directors

The person has been found to be of unsoundmind by a court of competent jurisdiction.

The person is an insolvent. The person has been convicted by a court of

an offense and sentenced to imprisonment of not less than six months.

The person has not made the payment of callswithin 6 months after such calls made.


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Restriction on the number of thedirectorship

No person can hold office as a director at one time inmore than 15 companies.

In calculating the number of companies of which aperson may be a director the following companies shall

not be included: A private company which is neither a subsidiary nor a

holding company of a public company. An unlimited company. An association not carrying on business for profits or which

prohibit the payment of dividend. A company in which such person is only an alternate

director.


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According to companies act 1965 now there isno restriction on the age limit of any director.

Penalty: any person who hold office as a director of more

than 15 companies shall be punishable with finewhich may extend to 50000 rupees in respect of

each of those companies after first 15.


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Director identification number

Every individual intending to be appointed asdirector of a company shall make anapplication for allotment of directoridentification number to the centralgovernment along with the fees prescribed.

The central government shall within 1 monthfrom the receipt of the application allot a DINnumber to the applicant.


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Every existing director shall within one month of the receipt of DIN, intimate his DIN to thecompany or all companies wherein he is adirector.

Every company shall within 1 week of the receiptof intimation furnish DIN of all of its director tothe registrar of companies.

Every person or company while furnishing anyreturn, information as are required to befurnished under this act shall quote the DIN insuch return, information.


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If any individual contravenes any of theprovision of those sections, every suchindividual or director shall be punishable withfine which may extend to Rs.5000.


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Appointment of director

A director may be appointer in any of thefollowing ways:

1.By the signatories of memorandum of association:

the first director of a company are appointed bythe promoters and their names are mentioned in

the articles.


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2. By the shareholders in the general meeting: The tenure of office of the first director is till the first

general meeting of the company. The appointment or re-appointment of these directors

can only be made, according to the provision of thecompanys articles, by consensus or voting of thecompanys shareholders.

In case of public company and its subsidiary privatecompany at least 2/3 of the total numbers must retireby rotation.

In case of private company all the directors can bepermanent.


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At the annual general meeting at which a directorretires as aforesaid, the company may fill upvacancy by appointing the retiring director or

some other person. The retiring director shall not be reappointed

unless:

A resolution for the reappointment of suchdirector has been put to vote and lost; He is disqualified for appointment;


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the retiring director has by a notice in writingaddressed to the company or its BOD express hisunwillingness to be so appointed.

A special or ordinary resolution Is required for hisappointment or reappointment.

Appointment by Board of Director:

Appointment in case of casual vacancy. Appointment of additional director. Appointment of alternative director.


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Appointment by third parties: Banks and other financial institutions. Debenture holders.

Vendors. Employees.

Appointment by central government: The central government may on application made

by 100 members of a company or at least 10 % of its members having the right to vote, appoint asmany directors of a company as it may deem fit inthe circumstances.


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Restriction in respect of appointment

Only individual to be directors. Restrictions in respect of qualification shares.

Not being incompetent to hold the office of director. Not being a director of more than 15

companies.

Documents

Power, function and duties of directors and.pptx