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DEFINITION:

As per section 2(34) of Companies Act,2013 director means a director appointed to the Board of a company.

ROLE OF THE BOARD OF DIRECTOR:

The Board of Directors are elected representatives of the Shareholders of the Company. The Board of Directors of a company collectively are responsible for making policies and governance process. The board have a freedom to decide in the good interest of shareholders and for stakeholder benefit.

RESPONSIBILITY OF DIRECTORS:

The board of directors of a company is primarily responsible for:

a. determining the company’s strategic objectives and policies;
b. monitoring progress towards achieving the objectives and policies;
c. appointing senior management;

COMPOSITION OF BOARD:

The Board of directors consist of Executive Director, Non-Executive Directors and Non executive Independent Director.

1) Executive Director: Executive Director are those who are in full employment and are influence of promoters or its group. Normally Chairman, Managing Director, Whole time Director. These people take daily part in day to day activities of Company.

2) Non-Executive Director: A director who is neither Managing Director nor Whole Time Director known as Non-Executive Director.

3) Non- Executive Independent Director: A director who fulfill the criteria mention as per section 149(6) is known as Independent Director.

Type

One Person Company

Private Company

Public Company

Minimum

1

2

3

Maximum

15

15

15

Provided that company can appoint more than 15 director after passing Special Resolution.

Provided further that every listed company and Public Company which having paid up capital of Rs.100 Crore or more ; turnover more than 300 crore shall have at least one woman director.

APPOINTMENT OF DIRECTORS:

By Shareholders

By Board of Directors

As per section 152(1) no provision is made in the articles of a company for the appointment of the first directors, the subscribers to the memorandum who are individuals shall be deemed to be the first directors of the company until the directors are duly appointed.

In case of a OPC an individual being member shall be deemed to be its first director until the director or directors are duly appointed by the member in accordance with the provisions of this section.

As per section 152 (2) every director shall be appointed by the company in general meeting.

Following types of Directors appointed by BOD:

1. Additional Director {Sec.161(1)};

2. Alternate Director {Sec.161(2)};

3. Nominee Director {Sec.161(3)};

4. Filing of Casual Vacancy {Sec.161(4)}.

For appointment of Director Company shall file form DIR-12 and Form MGT-14 within 30 days of appointment and passing resolution respectively.

LIMIT ON NUMBER OF DIRECTORSHIP:

As per section 165(1) No person shall hold office as a director including any alternate directorship, in more than 20 Companies at the same time;

Provided further that the maximum number of public companies in which a person can be appointed as a director shall not exceed 10.

In case Independent Directorship:

SEBI restricts directorship as an Independent Director to maximum of seven listed companies. In case Independent Director is Whole time Director in any listed company, he/ she can hold directorship as an Independent Director in maximum three listed companies.

DIRECTORS POWER:

To achieve high level of performance director must work on goals of the company. For achieving goals they must carry some power. The provisions of the Companies Act,2013 and articles of the company spell out powers of the Directors. Section 179 spell out all those provisions and all such power.

Power which can exercised only at Board Meeting by passing board resolution (Section 179)

a. to make calls on shareholders in respect of money unpaid;

b. to authorise buy back of securities under section 68;

c. to issue securities, including debenture, whether in or outside India;

d. to borrow monies;

e. to invest the funds of the company;

f. to grant loans or give guarantee or provide security in respect of loans;

g. to approve financial statement and the Board report;

h. to diversify the business of the company;

i. to approve amalgamation, merger or reconstruction;

j. to take over a company or acquire a controlling or substantial stake in another company;

k. to make political contribution;

l. to appoint or remove KMP;

m. to appoint internal auditor.

Company shall file form MGT-14 within 30 days after passing resolution under any of this.

RIGHTS OF DIRECTORS:

Individual Rights

Collective Rights

1. Inspect books of accounts{Sec.128}

2. Right to receive notice of Board Meeting.{Sec. 173}

3. Right to receive circular resolution proposed to be passes {Sec.175}

1. Private limited company can refuse to transfer shares as per section 58 and 59 of the Act.

2. Right to appoint KMP.

RESIGNATION OF DIRECTOR:

As per section 168 a director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar by filing form DIR-12 by company and form DIR-11 by director within 30 days of resignation.


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