Director liability
This query is : Resolved
21 August 2013
Hi Expert,
are the directors of a Pvt.Ltd. company personally liable for the liability of the company (in case of insolvency ) alike proprietor concern.
are the directors of a Pvt.Ltd. company personally liable for the liability of the company (in case of insolvency ) alike proprietor concern.
21 August 2013
No,,,their liability is limited to unpaid share capital if any
.
.
companies registered under companies ac enjoys seperate legal entity
Company and the persons who formed it are different from one and another
Note: however directors would be personally liable for contractual obligations which is not done as per articles of association of compnay
.
.
companies registered under companies ac enjoys seperate legal entity
Company and the persons who formed it are different from one and another
Note: however directors would be personally liable for contractual obligations which is not done as per articles of association of compnay
21 August 2013
Hi
The directors are in the eyes of the law, the agents of the company in which they are directors. This follows from the position that a company, which is a legal entity, cannot act by itself and it can act only through the medium of human agency, which is known under the Companies Act, 1956 as the Board of directors. Therefore, the general principles of the law of principal and agent regulate the relationship of the company and its directors. Accordingly, where the directors enter into contracts on behalf of a company in the ordinary course the company will be liable and not the directors.
No director of a company in his individual capacity has power to act on behalf of a company in any way unless the Board of directors delegates any power to him as provided in the Articles. so, he is not personally liable if he is doing on behalf of the company. Any act done by director on behalf of company out side the power of director will be personally liable.
Any director acting individually has no power to act on behalf of the company in respect of any matter except to the extent to which any power or powers of the board have been delegated to him by the board within the limit permitted by the Companies Act or any other law. The position of the Chairman of the board of directors is not substantially different from an individual director. [Shubh Shanti Services Ltd. v Manjula S. Agarwalla (2005) 60 SCL 280 (SC)].
The directors are in the eyes of the law, the agents of the company in which they are directors. This follows from the position that a company, which is a legal entity, cannot act by itself and it can act only through the medium of human agency, which is known under the Companies Act, 1956 as the Board of directors. Therefore, the general principles of the law of principal and agent regulate the relationship of the company and its directors. Accordingly, where the directors enter into contracts on behalf of a company in the ordinary course the company will be liable and not the directors.
No director of a company in his individual capacity has power to act on behalf of a company in any way unless the Board of directors delegates any power to him as provided in the Articles. so, he is not personally liable if he is doing on behalf of the company. Any act done by director on behalf of company out side the power of director will be personally liable.
Any director acting individually has no power to act on behalf of the company in respect of any matter except to the extent to which any power or powers of the board have been delegated to him by the board within the limit permitted by the Companies Act or any other law. The position of the Chairman of the board of directors is not substantially different from an individual director. [Shubh Shanti Services Ltd. v Manjula S. Agarwalla (2005) 60 SCL 280 (SC)].
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