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Company
Management-Directors
SUBHAYU DAS
Project designed by Subhayu Das(IILM BS)KOL
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Agenda
Director-The word imply-
Responsibilities of a DIRECTOR
Boundaries for a Director & appointment
Rules & rights of company management
FACTORS which turn sour the FACT
Removal of Directors & casual vacancies
Limitation for a managing director
Disqualifications of a managing director
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Director-The word imply-As
general-
Managing Director is that person who design,
develop and implement the strategic plan for
their company in the most cost effective and
time efficient manner.
As laws point
of view-
A managing director, as defined in Section 2(26),
means a director who is encrusted with
substantial powers of management which wouldnot otherwise be exercisable by him. The
"substantial powers" of management may be
conferred upon him by virtue of an agreement
with the company
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Responsibilities of a DIRECTOR
A managing director occupies the dual capacity of being a director aswell as employee of the company, so responsibility turned double.
Play a leadership role for an organization and the MD may fulfill a
motivational role for the workforce in addition to an operational role in the
running of the businessMD should manage overall management of a company.
This includes the staff, the customers the budget,
the company's assets and all other company resources
to make the best use of them and increase thecompany's profitability.
MD reports to the Board of Directors on a weekly, monthly, annual or every
decade basis to keep them informed of how the company is doing.
N Chandrasekaran(Chief Executive Officer
and Managing Director
of TCS)
PERFECT
EXAMPLE WHO
PLAYS HIS ROLE
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Boundaries for a Director-
A managing director who was prosecuted for default
under S. 220 contended that he was not liable as he had
resigned before the last date for filing accounts
Procedure Of Appointment [S. 269]
The appointment and remuneration require approval of
shareholders in general meeting.
Application for approval must be made within 90 days.
If there is no approval, the appointee should vacate the office from the
date of the communication of the refusal to the company, failing which
he incurs a penalty of Rs 500 for every day of usurpation of the office
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Appointment of a MDOne man army-
No body corporate, association or firm shall be appointed director of acompany, and only an individual shall be so appointed.
Appointment of directors and proportion of those who are to retire by rotation
If the place of the retiring director is not so filled up and the meetinghas not expressly resolved not to fill the vacancy, the meeting shall stand
adjourned till the same day in the next week, at the same time and place,
or if that day is a public holiday, till the next succeeding day which is not
a public holiday, at the same time and place.
In default of and subject to any regulations in the articles of a company,
subscribers of the memorandum who are individuals, shall be deemed to be thedirectors of the company, until the directors are duly appointed in accordance
with section 255
Restrictions on appointment or advertisement of director
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Rules & rights of company managementRules & rights of company management
Right of company to increase or reduce the number of directors-
Subject to the provisions of sections 252, 255 and 259, a company in
general meeting may, by ordinary resolution, increase or reduce the
number of its directors .
Company give right to persons other than retiring directors to stand
for directorship
Minimum number of directors-
[Provided those public company having,-
(a) a paid-up capital of five cr rupees or more;
(b) one thousand or more small shareholders,-Those company should have least THREE DIRECTORS.
Small shareholders" means a shareholder holding shares of
nominal value of twenty thousand rupees those company
should have two director.
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The person not to be appointed as managing director-
1.Who is an undischarged insolvent,or has at any time been adjudged an
insolvent.
2.A suspends or any time suspended
3.Who is convicted by a court of an offence involving moral turpitude.
The managing director is required by the articles of the company to hold a specified
share qualification & who is not already qualified in that respect, to obtain
qualification within two months after his appointment as director
BUT
After expiry of two months he does not hold the qualification then he shall be
punishable with Rs.50 for every day between such expiry & the last day on which he
acted as a director.
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REMOVAL OF DIRECTORS(SEC 284)A company may be removed a director (not being a director appointed
by the Central government in pursuance of sec408)before the expiryof his Period of office.
Special notice shall be required of any resolution to remove a director under this section, or to
appoint somebody instead of a director so removed at the meeting at which he is removed
On receipt of notice of a resolution to remove a director under this section, the company shall
forthwith send a copy thereof to the director concerned, and the director (whether or not he is a
member of the company) shall be entitled to be heard on the resolution at the meeting.
Positively send a copy of representations to every member
Of the company to whom notice of the meeting is sent
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Steps of removal of Director(cont..)
U/s 284 the procedure is as below :
1. Members have to object on the director and to call the AGM/EGM for the removal of the said
director.
2. Company have to send the copy of objection letter of members to the director.
3. The director (who required to be removed) may submit his representation in the EGM.
4. The EGM to be called and director may be removed with majority.
5. Form-32 to be filed along with the resolution passed in EGM.
6. Copy of form-32 along with the EGM resolution result to be intimated to the
. director removed.
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Limitation for a managing
directorAs per sec 317 no company appoint or employ any individual as its
managing director for a term exceeding five years at a time.
No director of a company shall hold any office or place of profit.
After the commencement of sec 275 no person shall hold office at the same time as director
in more than twenty companies.
In case of every company, a meeting of its Board Directors Shall be held at
least once in every three months & at least four such meetings shall be held
in every year.
No directors of a company participate or vote in Boards proceedings.
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Casual vacanciesIn private company where a director appointed in general meeting
Is vacated before his term of office will expire in the normal courseThe resulting casual vacancy may in default of and subject to any
regulations in the articles of the company, be filled by the Board of directors
at the meeting of the Board.
Any person so appointed shall hold office only up to the date up to whichthe director in whose place he is appointed would have held office if it had
not been vacated as aforesaid.
Vacation of office by directorsIf the MD is found to be of unsound mind by a court ofCompetent jurisdiction.
If he is adjudged an insolvent
If he absent himself from three consecutive meeting of the
Board of Directors.
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As per sec 260, Board ofDirectors can appoint additional Director.
BUT, that such additional directors shall hold office only
Up to the date of the next annual general meeting of the company.
REMUNERATION OF DIRECTORS-
A director who is either in the whole-time employment of the
Company or a managing director may be paid remuneration eitherby way of a monthly payment or at a specified percentage
of that net profits of the company or partly by one way and
partly by the order.
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Disqualifications of a managing
director
Potential causes of disqualification include:
1. Allowing the company to trade while insolvent2. Not keeping proper accounting records
3. Failing to prepare and file accounts
4. Not sending returns to Companies House
5. Failing to send tax returns and pay tax
6. Convicted by Court in any moral turpitude
Ignoring a disqualification order is a criminal offence. You could be fined and sent to
prison for up to two years.
Even if anyone have not been disqualified, rules introduced on 6 August 2007 may
prevent you from becoming a director of another company. The rules prohibit directors
of insolvent companies from becoming the director of another company with the same
or a similar name (known as a 'prohibited name') for 12 months. The rules also
prohibit directors of insolvent companies from acting in a way to promote, form or
manage a company with a prohibited name.
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ACKNOWLEDGEMENT
Through all the view points of the survey there have been many book
which give information to prepare this project work. Google search &
internet has helped a lot. I would like to thank Mr. Anindya Sen and all
other books to prepare my project efficiently and effectively.
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BIBLIOGRAPHY
Robert Gogans book Apartment living in Irerland.
Internet Articles
Books-
1. Wadhwas COMPANY ACT2. Marchentile Law by N.D Kapoor
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