Director unit 1
- 1. Boardof Directors under the Companies Act, 2013 By Anjali Dixit Assistant Professor Facultyof Juridical Sciences Rama University
- 2. Corporate Governance Ideal corporate governance is characterized by a firm commitment to ethical practices by the entire organisation in all of its dealings with a wide group of stakeholders encompassing employees, customers, vendors, regulators and all shareholders Corporate governance rests on four pillars ďśTransparency ďśFull disclosure ďśIndependent Monitoring ďśFairness to all stakeholders
- 3. Directors A corporation is an artificial person which is intangible and invisible. For making any decision and to have knowledge and intention, a living person has a mind and hands by which he carries out his actions. But a corporate body being an artificial person has none of these. So it needs to act through a living person. The companyâs business is entrusted in the hands of directors. Note: The Companies Act, 2013 does not contain an exhaustive definition of the term âdirectorâ. Section 2 (34) of the Act prescribed that âdirectorâ means a director appointed to the Board of a company.
- 4. Board of Directors Section 2 (10) of the Companies Act, 2013 defined that âBoard of Directorsâ or âBoardâ, in relation to a company, means the collective body of the directors of the company.
- 5. Board of Directors Responsibility The board of directors of a company is primarily responsible for: determining the companyâs strategic objectives and policies; monitoring progress towards achieving the objectives and policies; appointing senior management; accounting for the companyâs activities to relevant parties, e.g. shareholders
- 6. Board of Directors Minimum Directors Required in Company Section 149 lays down the minimum number of directors required in a company as follows :- i. One Person Company:- One Director. ii. Private Limited Company:- Two Directors. iii.Public Limited Company:- Three Directors. Residence of a director in India Section 149 (3) of the Act has provided for residence of a director in India as a compulsory i.e. every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.
- 7. Board of Directors Position of Directors The position of a director has been cited by Bowen LJ in the case of Imperial Hydropathic Hotel Co Blackpool v. Hampson as a versatile position in a corporate body. Directors are sometimes described as trustees, sometimes as agents and sometimes as managing partners. These expressions are from indicating point by which directors are viewed in particular circumstances.
- 9. Board of Directors ďś First Directors - Section 152 of the Companies Act, 2013 ďśResidential Director - Section 149(3) of Companies Act,2013 ďśIndependent Director - Section 149(6) of Companies Act,2013 ďśSmall Shareholders Directors â ďśWomen Director - Section 149 (1) (a) of Companies Act,2013
- 10. Board of Directors ďśAdditional Directors - Section 161(1) of Companies Act,2013 ďśAlternate Directors - Section 161(2) of Companies Act,2013 ďśShadow Director â ďśNominee Directors
- 11. Board of Directors Appointment Appointment at the general meeting â Section 152 Annual rotation Reappointment - Section 152 Fresh Appointment â Section 160 Appointment by nomination Appointment by voting on an individual basis Appointment by proportional representation Appointment of Directors by Board Appointment by Tribunal
- 12. Board of Directors Disqualifications The minimum eligibility requirement for the appointment of directors has been laid down under section 164 of the Companies Act, 2013.
- 13. Board of Directors Removal of directors The removal of directors takes place by: Shareholders Company Law Tribunal Resignation
- 14. Board of Directors Director Identification Number (DIN) Director Identification Number (DIN) is a unique 8- digit number allotted to a person who is appointed the director of a company. The validity for such a number is for a lifetime. He has to make an application in the Form DIR-3 (in case of an existing company) according to Section 153 and 154 of Companies Act, 2013. However, in the case of formation of a new company, the application is made only through SPICe (Form INC-32) at the time of its incorporation.
- 15. Board of Directors Powers of Directors General powers vested under section 179 Section 149 of the Companies Act, 2013 empowers the directors with the general power vested in the Board. The Board of directors is entitled to exercise all the powers and do all required actions which a company is authorised to exercise. But, such action is subject to certain restrictions.
- 16. Board of Directors ďPowers to be exercised with general meeting approval Section 180 of the Companies Act 2013 states certain powers which can be exercised by the Board only when it is approved in the general meeting. ďPower to constitute an Audit committee The board of directors are empowered under section 177 to constitute an audit committee. ďPower to constitute Nomination and Remuneration Committees and Stakeholders Relationship Committee The Board of directors can constitute the Nomination and Remuneration Committee and Stakeholders Relationship Committee under section 178.
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