6/12/15

DUTIES OF DIRECTORS
-COMPANIES ACT 2013

AGENTS

TRUSTEES

EMPLOYEES

DUTIES LAID DOWN BY

COURTS ARE:
Honesty
Good faith
Care
Diligence
Disclosure of interest

6/12/15

COURTS HELD THE POSITION OF

DIRECTORS AS :

DUTIES PROPOSED IN COMPANIES ACT 2013SECTION 166

6/12/15

A director shall act in accordance with the Articles of

the company.
Act in good faith in order to promote the objects of the
company for its benefit & environment.
Exercise his duties with due and reasonable care, skill
and diligence and shall exercise independent judgment.
No direct or indirect conflicts of interest with the
company.
No undue gain or advantage and if so, he shall be liable
to pay an amount equal to that gain to the company.
A director of a company shall not assign his office and
any assignment so made shall be void.

SECTION 184 REGARDING DISCLOSURE

OF INTEREST BY DIRECTORS
6/12/15

Every director shall at the first meeting of the Board in

which he participates as director
At the first meeting of the Board in every financial year
Whenever there is any change in the disclosures already
made, then at the first Board meeting held after such
change,
Disclose his concern or interest in any :1. Company/ies,
2. bodies corporate,
3. Firms,
4. other association of individuals,
. which shall include the shareholding, in such manner as
may be prescribed.

SECTION 184 REGARDING DISCLOSURE

OF INTEREST BY DIRECTORS
Directors direct / indirect concern or interest in following
contract /arrangement is covered.

Contract /arrangement of the Company :{1} entered into, or

{2} to be entered into
WITH :{a} a body corporate in which the director holds more
than
2% cent shareholding , or where he is a
promoter / CEO or
{b} a firm or other entity in which, he is a partner, owner or
member.
His disclosure required at Board meeting where matter discussed.
He cannot participate & consequently vote, however, his presence
will count for quorum

6/12/15

SECTION 184 REGARDING DISCLOSURE

OF INTEREST BY DIRECTORS

6/12/15

A contract or arrangement entered into by the

company in contravention - VOIDABLE at the
option of the company.
EXCEPTION any contract or arrangement

entered into or to be entered into:{A} between two companies &

{B} where any of the directors of the one
company or two or more of them together
hold/s not more than 2% of the paid-up
share capital in the other company.

SECTION 188 REGARDING

RELATED PARTY TRANSACTIONS

Sale, purchase or supply of any goods or materials.

Selling or otherwise disposing of, or buying, property of any kind.
Leasing of property of any kind.
Availing or rendering of any services.
Appointment of any agent for purchase or sale of goods, materials,
services or property.
Such related party's appointment to any office or place of profit in the
company, its subsidiary company or associate company.
Underwriting the subscription of any securities or derivatives thereof, of
the Company.
Significantly, the words related party have been defined first time in the
Companies Act 2013 under section 2 {76} which definition has to be invoked at
outset. This includes, among others, director, relative, KMP, their firms, private/
public companies, etc.
Office or place of profit has been defined - for a director receiving remuneration
over & above his entitlement of directors remuneration .

6/12/15

CONSENT OF BOARD is required at its meeting for the company to enter into
any contract or arrangement with the related party for :

GENERAL BODY APPROVAL/ NO VOTING BY RELATED

PARTY/ JUSTIFICATION/ CONTRAVENTION - SECTION

188

6/12/15

Previous approval of the members in a general meeting required by way of

passing special resolution. {As may be prescribed by the Central Government}
No member who is a related party shall vote on special resolution to approve
any contract or arrangement which may be entered into by the company with
the related party.

EXEMPT any transactions which are entered into by the company in

ordinary course of business
NOT EXEMPT transactions which are not on an arms length basis.

TRANSACTION shall be referred to in the Boards report along with the

justification for entering into such contract or arrangement.
In case of contravention, can be ratified by Board/ members within 03
{THREE} months.
Else VOIDABLE at the option of Board.
INDEMNITY by director to company.
Company can also RECOVER any loss from director.

SECTION 192 REGARDING RESTRICTION ON NON

CASH TRANSACTIONS INVOLVING DIRECTORS

6/12/15

Acquisition of assets by director from the company

No company shall enter into an arrangement by which a director of
company or its holding, subsidiary associate company, or a connected
person, acquires assets for consideration other than cash, from the
company.
Acquisition of assets by the company from director
The company is restricted from acquiring assets for consideration other
than cash from director or connected person .
Members approval
Members approval is required by way of an ordinary resolution.
The notice for of general meeting shall include the PARTICULARS of the
arrangement along with the VALUE OF THE ASSETS involved in such
arrangement duly calculated by a registered valuer.
Contravention
Any arrangement in contravention of the provisions of this section shall
be VOIDABLE at the instance of the company with exceptions of the
company being indemnified or bonafide transaction for value.

CLAUSE 194 REGARDING PROHIBITION ON

FORWARD DEALINGS IN SECURITIES OF COMPANY
BY DIRECTOR OR KEY MANAGERIAL PERSONNEL

6/12/15

This sub clause prohibits the following persons: Any WTD or any of KMP of a company from buying:in the company or in its holding / subsidiary/ associate
company,
a right to call for delivery, or a right to make delivery, OR
a right, as he may elect to call for delivery, or to make
delivery at a specified price and within a specified
time, of
a specified number of relevant shares or a
specified amount
of relevant debentures;
The consequences of contravention are that the acquirer shall be
liable to surrender the same to the company.
Company is also prohibited to give effect to the transfer of the
securities, & depository not to record such acquisition .

10

SECTION 195 REGARDING PROHIBITION

ON INSIDER TRADING OF SECURITIES.
PERSON INCLUDING ANY DIRECTOR OR KEY MANAGERIAL PERSONNEL
OF A COMPANY SHALL ENTER INTO INSIDER TRADING OF SECURITIES.

6/12/15

NO

PROHIBITION

- AN ACT OF :- subscribing, buying, selling, dealing or agreeing to

subscribe, buy, sell or deal in any securities of the company, by any director, or key
managerial personnel/, officer if such director etc is reasonably expected to have access
to any NON-PUBLIC PRICE SENSITIVE INFORMATION in respect of securities
of company.
PROHIBITION - AN ACT OF :1.
giving counsel, guidance or advise to any person, about procuring, directly or
indirectly, any non public price sensitive information, or
2.
communicating to any person, directly or indirectly, any non public price
sensitive information.
.
EXCEPTION

is that this does not apply to any communication required in the ordinary
course of business or profession or employment or under any law

.
Price

sensitive information relates, directly or indirectly, to a company and which if

published is likely to materially affect the price of securities of the company.

11