Itft company management

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Definition of a Director

A director is the head of an organization, either elected or appointed, who generally has organization, either elected or appointed, who generally has

certain powers and duties relating to management or

administration.



Appointment of Directors1. By the articles as regards first directors.2. By the company in general meeting.3. By the directors,4. By third parties4. By third parties5. By the principle of proportional

representation6. By the central government



1. First directors• The first directors are usually named in the

articles.• The articles may also provide that both the

number and the names of the first directors number and the names of the first directors shall be determined in writing by the subscribers to the memorandum or a majority of them.



2. Appointment by company• Appointment of subsequent directors is made

at every annual general meeting of the company.



3. Appointment by Directors:

• The directors are empowered to appoint• i) Additional directors.• ii) Alternate directors.• iii) Directors filling casual vacancy.• iii) Directors filling casual vacancy.



4. Appointment by third parties• The articles may gives right to debenture-

holders, financial corporations or banking companies who have advanced loans to the company to nominate director on the board of the company. of the company.



5. Appointment by proportional representation:• The articles of a company may provide that

the appointment of not less than2/3 of the total number of director of a public company shall be according to the principle of proportional representation, either by the proportional representation, either by the single transferable vote or by a system of cumulative voting or otherwise.



6. Appointment by the central government:

• According to section 408 of the companies act, the central government has the power to appoint directors for the purpose of prevention of oppression and mismanagement. mismanagement.

• It provides that the central government may appoint such number of directors on the board of the company



Position of directors

• Some describe the directors as trustees, agents or managing partner.

• Jessel, M.R. has observed, “ it does not matter much what you call them so long as you much what you call them so long as you understand what their true position is, which is that are merely commercial men managing a trading concern for the benefit of themselves and all other share-holders in it



Restriction on appointment of directors

unless he or his agent in writing has signed and filed with the registrar consent in writing to act as such director and has:

• (a) Signed the memorandum for his qualification shares; or

• (b) Taken his qualification shares from the • (b) Taken his qualification shares from the company and paid or agreed to pay for them; or

• (c) Signed and filed with the registrar an undertaking in writing to take from the company his qualification shares and pay for them; or

• (d) Field with the registrar an affidavit that his qualification share, if any, are registered in his name.



Disqualification of directors• (i) He has been found to be of unsound mind by a

competent court and the finding is in force;• (ii) He is an un discharged insolvent;• (iii) He has applied to be adjudicated as an

insolvent and his application is pending;insolvent and his application is pending;• (iv) He has been convicted of an office involving

moral turpitude and sentence to imprisonment for not less than 6 months and a period of 5 year has not elapsed since the expiry’s of his sentence;

• (v) He has not paid any call in respect of share of the company held by him for period of six month from the last day fixed for the payment;



Meetings Of The Board Of Directors• Time and Place of Meetings • Notice of Meetings • Calling of Special Meetings: • Organization • Proxy• Proxy• Participation• Quorum • Board Action at Meeting • Board Action without Meeting• Agenda for Meetings • Materials Distributed in Advance • "In Writing" Defined



Powers of Directors

• the power to make calls on shareholders in respect of money unpaid on their shares;

• the power to authorize the buy-back referred to in the first proviso to clause clause

• the power to issue debentures; • the power to borrow moneys

otherwise than on debentures; • the power to invest funds of the

company; and • the power to make loan.



Duties of a Director• 1. Statutory Duties: • To convene statutory, Annual General meeting (AGM)

and also extraordinary general meetings [ Section 165,166 &169]

• To prepare and place at the AGM along with the balance sheet and profit & loss account a report on the company’s affairs including the report of the balance sheet and profit & loss account a report on the company’s affairs including the report of the Board of Directors (Section 173, 210 & 217).

• To authenticate and approve annual financial statement (Section 215).

• To appoint first auditor of the company (Section 224). • To appoint cost auditor of the company (Section

233B). • To make a declaration of solvency in the case of

Members voluntary winding up (Section 488).



2. General Duties

• Duty of good faith• Duty of care• Duty not to delegate



Liabilites of a Director

• Liability to the company:• Liability under the Companies Act: • Liability for breach of warranty• Liability for breach of statutory duties: • Liability for breach of statutory duties: • Liability for acts of co-directors:



Auditors: audit committee; appointment

of auditors; rights, of auditors; rights, powers and duties of

auditors.



Sec 292A - Audit Committee

• "Audit Committee" which shall consist of not less than three directors and such

number of other directors as the Board number of other directors as the Board may determine of which two-thirds of the

total number of members shall be directors, other than managing or whole

time directors.



APPOINTMENT OF AUDITORS

• APPOINTMENT OF FIRST AUDITORS• A Board meeting should be conveyed within

one month of the date of registration of the Company Company

• The person being appointed as the first Auditors of the Company should not hold any security carrying voting right of that Company.



APPOINTMENT OF RETIRING AUDITORS

• An Auditor is normally being reappointed at the A.G.M. Therefore, the Company should obtain a written certificate from the Auditor that the re-appointment, if made, will be in accordance with the limits specified in Section 224(1B).the limits specified in Section 224(1B).

• The Company convening the AGM, (after issuing notices in writing at least 21 days before the meeting along with the Explanatory statement), should pass ordinary resolution in the A.G.M. appointing the retiring Auditor as Auditor of the Company



• Three copies of the notice and proceedings of A.G.M. should be sent to the Stock Exchange, where such shares of the Company are listed.

• The Company should intimate the Auditor • The Company should intimate the Auditor about his appointment within 7 days of the passing of the Resolution appointing him.



APPOINTMENT OF AN AUDITOR OTHER THAN THE RETIRING ONE• The Company must receive a Special Notice

from a member/shareholder not less than 14 days before the ensuing A.G.M.

• The Company must send forthwith a copy of such notice to the existing auditor of the such notice to the existing auditor of the Company.

• A certificate in writing should be obtained from the proposed new Auditor to the effect that his appointment, if made, will be in accordance with the limits as specified in Sec. 224(1B).



Rights of an Auditor• Right of Access to Books of Accounts:• Right to obtain Information and

Explanations:• Right to Correct any Wrong Statement:• Right to Correct any Wrong Statement:• Right to visit Branches:• Right to Signature on Audit Report:• Right to receive Notice and other

Communications relating to General Meeting and attend them:

• Right to have Legal and Technical Advice:



Winding up of a company

• Winding up of a company is defined as a process by which the life of a company is

brought to an end and its property administered for the benefit of its members

and creditors.and creditors.



Procedure for Winding Up of A Company• Firstly, issuing a written demand for debt repayment

to the target company• Secondly, presenting a winding-up petition to the

Court and the company.• Thirdly, Court hearing for the petition.• Fourthly, granting of winding-up order by the Court.• Fifthly, meeting of creditors and other relevant

parties.• Sixthly, appointment of liquidator.• Seventhly, realization and distribution of company's

assets to the creditors.• Eighthly, release of duties for liquidator.



Modes of Winding up of the company:

• By the Tribunal i.e. compulsory winding• 2. Voluntary winding up, which may be• (a) Member's voluntary winding up;• (b) Creditor's voluntary winding up;• (b) Creditor's voluntary winding up;



Winding up by the Tribunal:• If the company has, by special resolution, resolved

that the company may be wound-up by the tribunal;• If default is made in delivering the statutory report to

the registrar or in holding the statutory meeting;• If the company does not commence its business

within a year from its incorporation, or within a year from its incorporation, or suspends its business for whole of a year;

• If the number of members are reduced then their required number;

• If the company is unable to pay its debts;• If the tribunal is of the opinion that it is just and

equitable that the company should be wound up;



Voluntary Winding Up:• When the period fixed for the duration of the

company in its articles has expired• When an event on the happening of which the

company is to be dissolved as per its articles happenshappens

• The company resolves by a special resolution at a general meeting to be voluntarily wound up.



Consequences Of Voluntary Winding Up

• (1) A voluntary winding up shall be deemed to commence from the date or the passing of the resolution to that effect (Sec. 486).

• (2) From the commencement of voluntary winding up, the company ceases to carry on its winding up, the company ceases to carry on its business, except so far as may be required for the beneficial winding up thereof (Sec. 487).

• (3) The possession of the assets of the company vests in the Liquidator for realisation and distribution among the creditors. The corporate state and powers of the company shall, however, continue until it is dissolved (Sees. 456 and 487).



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Itft company management