Friday 29 June 2018
Roles Responsibilities of a Director in a Company
Roles Responsibilities of a Director in a Company
Under this article, we are going to explain the meaning of Director as per Companies Act 2013 and also Directors Roles and Responsibilities in a company, Duties of Director, etc.
� Definition:
Director: An appointed or elected member of the Board of Directors of Company. {Sec 2(34)}
Board of Directors: In relation to a company, means the collective body of the directors of the company. {Sec 2(10)}
� Positions held by Directors:
o Managing Director: Means a director who by virtue of Company or an agreement with the company or a resolution passed in its general meeting or by its board of Directors is entrusted with the substantial powers of management of the affairs of the company.
o Whole Time Director: Includes a director in the whole time employment of the company.
o Manager: Means an individual who subject to the superintendence, control and direction of the Board of Directors, has the management of the whole or substantially the whole of the affairs of the company and includes a director or any other person occupying the position of a manager, by whatever name called.
o Officer in default: �officer who is in default�, for the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any penalty or punishment by way of imprisonment, fine or otherwise, means any of the following officers of a company, namely:
� Whole-time director
� Key managerial personnel
� where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and who has or have given his or their consent in writing to the Board to such specification, or all the directors, if no director is so specified;
� any person who, under the immediate authority of the Board or any key managerial personnel, is charged with any responsibility including maintenance, filing or distribution of accounts or records, authorizes, actively participates in, knowingly permits, or knowingly fails to take active steps to prevent, any default;
� any person in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act, other than a person who gives advice to the Board in a professional capacity;
� every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him of any proceedings of the Board or participation in such proceedings without objecting to the same, or where such contravention had taken place with his consent or connivance;
� in respect of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchant bankers to the issue or transfer.
o Key Managerial Personnel: �key managerial personnel�, in relation to a company, means�
� the Chief Executive Officer or the managing director or the manager;
� the company secretary
� Chief Financial Officer
� Others as may be prescribed
Refer http://csnehasethassociates.blogspot.in/2015/08/lets-understand-kmp-key-managerial.html
� Types of Directors:
o Residential Director: 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. {Sec 149(3)}.
o Independent director: As per section 149(6) an independent director in relation to a company, means a director other than a Managing Director, Whole Time Director Or Nominee Director. Companies which have to appoint Independent Director:- As per Rule 4 of Companies (Appointment and Qualification of Directors) Rules,2013 the following class of companies have to appoint at least two independent directors:-
A} Public Companies having Paid-up Share Capital-Rs.10 Crores or More;
B} Public Companies having Turnover- Rs.100 Crores or More;
C} Public Companies have total outstanding loans, debenture and deposits of Rs. 50 Crores or More.
Tenure of Director:- an independent director hold office for a term up to 5 consecutive years,
-Also eligible for reappointment by passing Special Resolution and also require its reappointment in Boards Report.
-He shall not hold office for more than 2 Consecutive terms, but shall not be eligible to appoint after expiration of 3 Years of ceasing to become an independent director.
Remuneration to Independent Director:- An independent director shall not be eligible for any stock option as per section 149(9) of Act. But they may receive remuneration by way of fee provided under section 197(5) of the Act. Sitting fees for Board meeting and other committee meeting shall not be exceed Rs. 1,00,000 per meeting.
o Small Shareholders Directors:- A listed Company may have one director elected by small shareholders. May appoint upon notice of not less than 1000 Shareholders or 1/10th of the total shareholders, whichever is lower have a small shareholder director which elected form small shareholder.
o Women Director:- As per Section 149 (1) (a) second proviso requires certain categories of companies to have At Least One Woman director on the board. Such companies are any listed company, and any public company having-
Paid Up Capital of Rs. 100 crore or more, or Turnover of Rs. 300 crore or more.
o Additional Directors: Subject to the articles, the Board may appoint any person, other than a person who fails to get appointed as a director in a general meeting as an additional director.
o Alternate Directors:- As per Section 161(2) A company May appoint, if the articles confer such power on company or a resolution is passed (if an Director is absent from India for atleast three months).
o Shadow Director:- A person, who is not appointed to the Board, but on whose directions the Board is accustomed to act, is liable as a Director of the company, unless he or she is giving advice in his or her professional capacity.
o Nominee Directors:- They can be appointed by certain shareholders, third parties through contracts, lending public financial institutions or banks, or by the Central Government in case of oppression or mismanagement.
� Decision making of Directors:
o Board Meeting:
� First Board Meeting should be held within 30 days of the Incorporation.
� A notice not less than 7 days in writing is required to call a board meeting.
� Notice of Board Meeting shall be given to all directors, whether he is in India or Outside India by hand delivery or by post or by electronic means
� Director can participate in the Board meeting through video conferencing or other audio visual mode as may be prescribed.
� At least 4 Board meeting should be held each year, with a gap of not more than 120 days between 2 board meetings.
