Professional Documents
Culture Documents
Directors: Appointment, power, duties and liabilities Winding up of company: meaning, modes
a director, if he has been charged with the responsibility of directing, conducting and controlling the affairs of a company
Disqualification of directors
A person with unsound mind An un discharged insolvent Person who has applied to be adjudicated as an insolvent and
his application is pending before court of law Person convicted by court for moral turpitude Person disqualified by order of an court to act as director A person who failed to pay call money, on his shares for six months from date the call became due
Disqualifications
a person who is already a director of a public company which,
(i)
has not filed the annual accounts and annual returns for any continuous three financial years commencing on and after the first day of April, 1999; or
(ii) has failed to repay its deposit or interest thereon on due date or redeem its debentures on due date or pay dividend and such failure continues for one year or more.
Qualification Of Director
Under the act, only individuals can become directors There is no academic, technical qualifications for a director Section 270 of act, requires a director to hold qualification shares in
the company, and it should be fixed by the articles of company The nominal or face value of the qualification shares of director fixed by articles should not exceed rs 5000. The qualification shares must be acquired by a person elected as a director within 2 months of his appointment As per section 149 , director appointed by promoters of a newly incorporated firm, director must pay for qualification shares before certificate to commence business is obtained
Contd..
For the purpose of the calculation of the qualification shares,
only shares included in the share certificate in the name of director are taken into account, share warrants in his name shouldnt be taken into account.
the prospectus
first directors By the company in general meetings By the board of directors By third parties By the principle of proportional representation By the central government
Kinds of directorship
Whole-time Directorship
Not more than 15 companies excluding the directorships of, private companies [other than subsidiaries or holding companies of public company(ies)].
Contd.
i. i.
unlimited companies, associations not carrying on business for profit or which prohibit payment of a dividend, and alternate directorships (i.e., he is appointed to act as a director only during the absence or incapacity of some other director).
ii.
Duties of DIRECTORS
1. Fiduciary duty (relationship of legal and ethical trust)
Exercise powers honestly and bona fide for the benefit of the
company They must not make any secret profit out of their positions
Directors should carry out their duties with reasonable care and skill, diligence Standard of care: depending upon nature of work, division of power, customs and remunerations
Other duties
To attend board meetings Not to delegate his functions except to the extent
POWERS OF DIRECTORS
General powers of board Powers to be exercised at board meetings Powers to be exercised with the approval of company in
general meetings
Political contributions
Liabilities of directors
Liability to third party Liability to company Liability to breach of statutory duties Liability of acts of his co-directors
REMOVAL OF DIRECTORS
Directors can be removed by 1. 2. 3.
Share holders
Central government
Company law board
WINDING UP OF COMPANY
The legal process by which a joint stock company is brought
of company is wound up
liabilities are paid off and the surplus if any, is distributed among the members in accordance with their rights
Modes of winding up
Compulsory winding up or winding up by order of the
tribunal
Voluntary winding up
wound up by tribunal If a public company has failed to hold statutory meeting or file statutory report to registrar of companies If it has not commenced business within year of its incorporation If the number of members has fallen below seven in case of public company and below 2 in Pvt. Ltd. If the company is unable to pay debts If the tribunal is of the opinion that it is just and equitable that the company should be wound up
Voluntary winding up
Winding up which is brought about voluntarily without
interference of the tribunal of companies through any order, but winded up voluntarily by members of company or by the creditors Voluntary winding up is of 2 types:
Members voluntary winding up Creditors voluntary winding up
brought in by members. When the period for which the company has been formed has expired and company has passed ordinary resolution When the event on happening of which the company should wound up has occurred and company has passed ordinary resolution When a company has passed a resolution that it should wound up voluntarily
tribunal, after company has passed special resolution for voluntary winding up, tribunal can entertain the same and pass such order to protect interest of, company, members and creditors. Tribunal can exercise full control over winding up of company Can appoint new liquidator in the place of existing liquidator Can put restrictions on existing liquidator Or appoint additional liquidator to act on behalf of tribunal, along with existing liquidator
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