Role of directors in a Company

Role of directors in a Company

Introduction

A corporation body or a corporation is only an artificial being having to exist in eyes of law. It has neither an individual who has a mind and body and nor a capacity to think. So, to carrying out all works, transactions, and functioning the corporate body, their needs a human being. And there arises the need for directors. The corporate body is the function through the living persons with the various capacity mention in The Companies Act 2013.

The director is nothing but an individual according to Section 149 of the Companies Act 2013. Director is appointing by various processes mentioned in this Act. One director is appointed than the person can be removed from the director post for the non-compliance of rules mentioned in the Act. Director has not only one specific right and duties but also has the right to control all affairs of the companies. Director is working under the shield of the corporation. But the director can be liable for specific performance done under the shield of the corporation.

Who can be called as Director?

According to Section 2(34) of the Companies Act, “director” means direct or appointed by the Board of a Company. Every company needs an individual living person to control all the affairs of the company. Under Section 154, to define a person as a director there must be allotment of Director Identification Number. According to sec. 149 of the Companies Act, 2013: –

• In the case of the public company, there must be at least three directors.
• In the case of a private company, there must be at least two directors.
• In the case of the one-person company, there must be at least one director.
• If any company needs more than 15 directors than it needs to be pass special resolution.
• There must be a one-woman director.
• In the case of listed company their must 1/3 of directors which shall be independent directors.
• One director has to stay in India not less than 182 days in the previous calendar year.

Disqualifications for appointment as director

A person shall not be eligible for appointment as a director of a company, if —

• He is of unsound mind and stands so declared by a competent court.
• He is an undischarged insolvent.
• He has applied to be adjudicated as an insolvent and his application is pending.
• He has been convicted and sentenced to imprisonment for at least 6 months and 5 years from the expiry of the sentence have not got over.
• He has been convicted and sentenced for a period of 7 years or more.
• An order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force.
• He has not paid any calls in respect of any shares of the company held by him & 6 months have elapsed from the last day fixed for the payment of the call.
• He has been convicted of the offense dealing with related party transactions under section 188 at any time during the last preceding five years.
• He has not obtained DIN.
• A person who is director of a company which has not filed financial statements or annual returns for 5 continuous years, till the expiry of 5 years from the date of default.
• A person who is director of a company which has failed to repay deposits, debentures or distribute a dividend for a period of one year, till the expiry of 5 years from the date of default.
• Private Companies can provide for additional disqualifications in their Articles.

DUTIES OF DIRECTORS

• Director to act in accordance with AOA.
• A director of a corporation shall act in straightness so on the market the objects of the company for the advantage of its members as a whole, and within the best interests of the corporate, its employees, the shareholders, the community, and for the protection of the environment.
• A director of a corporation shall exercise his duties with due and ordinary care, skill and diligence and shall exercise independent judgment.
• A director of a company shall not involve during a situation during which he may have an instantaneous or indirect interest that conflicts, or possibly may conflict, with the interest of the corporate.
• A director of a corporation shall not achieve or decide to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates.
• A director of a corporation shall not assign his office and any assignment so made shall be void.

Author: Sonali Gorai,
Adamas University/ 3rd Year/ Perusing BALLB(H)