Company management

A company being an artificial person cannot act by itself. It has neither mind nor a body of its own.

The persons by whom the business of the company is carried on are termed as directors.

Director ??Definition in companies act does not throw light on the functions and nature of duties performed by a director. So a director may be defined as a person who directs, controls, manages the affairs of the company.

The directors of a company collectively are called Board Of Directors.

It can be only an individual

Number of directorsEvery public company shall have at least three directors.

Paid up capital of Rs.5 crore or more + 1000 or more small shareholders- one director

Every other company shall have at least two directors.

Maximum limit will be provided in the AOA. Increase or decrease by ordinary resolution and central govt approval if more than 12

Appointment of directorsBy the articles as regard first director or if not

namedBy the company in general meeting- two third of

total no. of directors of a public company liable to retire on rotational basis-public co or pvt co if subsidiary of public co

Provisions-a.1/3rd should be retiring from officeb.Directors who have been from longc.Vacancy to be filled by retiring or any otherd.If not, then resolution. If no resolution meeting

adjourned same day in next week. If still not, retiring director seem to have been re-appointed

By the directors-additional (next AGM, no increase in max no.)/casual/alternate (in AOA, resolution in AGM)

By third parties- one third of directors on non rotational basis.

By proportional representation- not less than 2/3rd , but only once in 3 years and in casual vacancy

By the central government- to protect the interest of shareholders, not more than 3 years. Applicable only If applied by- not less than 100 members or members not holding 1/10thof total voting rights

Number of directorsNot in more than 15 companies. But

exclusiveMake choice of vacating in 15 days or the

new directorship is cancelled

Position of directorsa.As agentsb.Employeesc.Officersd.Trustees- money, property and powers

Qualification of directorsNo provision regarding the qualification of directors.

But AOA provides some qualification regarding the shares.

Penalty- will be punishable which may extends to Rs. 500

Disqualification of directors Must be- an individual, competent, hold share

qualificationIs disqualified if:-Unsound mind.Insolvent or if application is pendingHas not paid any call in respect of shares held

by him for 6 yearsDisqualified by courtFailed to repay loan or interest or not submit

the accounts/auditing when he is already

director of public co.

Meetings of directorsNumber of meetings- held at least once in

every quarter and at least 4 such meetings in every year

Notice of meetings- to be given in writing to every director being in India and at his address in India

Quorum- atleast 1/3rd or even rounded off or 2, whichever is higher. If does not held, adjourned till same day in next week, same time and place. If public holiday, then the day following the same

Duties of directorsFiduciary duties- benefit of company,

honestly, should not conflict his personal interest

Duty of care and skillDuty to attend board meetingDuty not to delegate except to the

extent in ActDuty to disclose interest

Removal of directors By the shareholders- by ordinary resolution except in the following case.Is appointed by the central government

Removal by the central government-If a person is in fraudNot with sound princilesConduct of the person has been such which is injurious or damaging the interest of the trade, industry,creditors,members

Removal by company law board– on the application of the tribunal for prevention of mismanagement, the tribunal may terminate, or modify the agreement between the company and the director.

They will terminate for five years and can not claim damages or loss.