UNIT – II Appointment of Directors DEPARTMENT OF MANAGEMENT STUDIES UNIT – II Appointment of Directors Dr. G. MAHESWARAN/AP 6/13/2018

DIRECTORS-APPOINTMENT,POWERS AND LEGAL POSITION Who is a director??? Dr. G. MAHESWARAN/AP

DEFINITION As per Section 2(34) of Companies Act 2013 Director means a person appointed to the Board of a Company.  Dr. G. MAHESWARAN/AP

BOARD OF DIRECTORS ACCORDING TO SEC 149 OF COMPANIES ACT, THE DIRECTORS OF A COMPANY ARE COLLECTIVELY REFFERED TO AS THE “BOARD OF DIRECTORS” Dr. G. MAHESWARAN/AP

RESPONSIBILITY  The board of directors of a company is primarily responsible for: determining the company’s strategic objectives and policies; monitoring progress towards achieving the objectives and policies; appointing senior management; accounting for the company’s activities to relevant parties, e.g. shareholders. Dr. G. MAHESWARAN/AP

MANAGING DIRECTOR MANAGER WHOLE TIME DIRECTOR Dr. G. MAHESWARAN/AP

CHANGE IN LAW CONCERNING DIRECTOR ACCORDING TO NEW COMPANIES ACT 2013 Dr. G. MAHESWARAN/AP

Approval of central government was necessary. COMPANIES ACT 1956 COMPANIES ACT 2013 According to 1956 act the maximum limit of directors in a company was 12 Approval of central government was necessary. According to new companies act, 2013 the maximum limit of directors in a company has been increases from 12 to 15. Further to that can be made by passing the special resolution. Approval of central government has been dispensed off. A company can become a director for only 15 companies A company can become a director for only 20 companies instead of 15. Out of this 20 companies he cannot be directors of more than 10 public company. The amount to be deposited along with the notice of nomination to any person to the office of directors was Rs.500. The amount to be deposited along with the notice of nomination to any person to the office of directors has been increased from Rs.500 to Rs. 100000 or such higher amount as may be prescribed. Dr. G. MAHESWARAN/AP

At least one women director for prescribed class or classes of companies. The woman directors is been mentioned in section 149(1) of the companies act 2013 At least one director shall be a person who has stayed in India for at least 180 days in e previous calendar year. Listed companies may have directors 1 directors elected by small companies. Dr. G. MAHESWARAN/AP

INDEPENDENT DIRECTORS Separate definition of independent directors is there under section 2 (47) of the companies act 2013. Listed company to have at least 1/3rd of the total number of directors as independent directors. No. of independent directors for an unlisted company and its subsidiaries will be prescribed by the central government. Dr. G. MAHESWARAN/AP

RESTICTION ON NUMBER OF DIRECTORSHIPS 1 One Person Company:-One Director. 2 Private Limited Company:-Two Directors. 3 Public Limited Company:- Three Directors. Dr. G. MAHESWARAN/AP

Qualifications of a director The rules governing the appointment are 1. Been allotted a (DIN) 2.Signed the memorandum for his qualifications shares from the company and paid or agreed to pay for them. 3.Signed and filed with the registrar a written undertaking shares from the company,if any and pay for them. Dr. G. MAHESWARAN/AP

Disqualification of a director(section 164) (1) A person shall not be capable of being appointed director of a company, if  (a) he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force; (b) he is an undischarged insolvent; (c) he has applied to be adjudicated as an insolvent and his application is pending; (d) he has been convicted by a Court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months, and a period of five years has not elapsed from the date of expiry of the sentence; (e) he has not paid any call in respect of shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call; or (f) an order disqualifying him for appointment as director has been passed by a Court in pursuance of section 203 and is in force, unless the leave of the Court has been obtained for his appointment in pursuance of that section. Dr. G. MAHESWARAN/AP

Appointment & VACATION of Directors Dr. G. MAHESWARAN/AP

According to compaines act, no body corporate,associtaion or frim shall be appointed director of a company,and only an individual shall be so appointed Dr. G. MAHESWARAN/AP

APPOINTMENT OF DIRECTORS By the Signatories of Memorandum of association By the Shareholders in the General Meeting Appointment by Board of Directors Appointment by Proportional Representation Dr. G. MAHESWARAN/AP

By the signatories of memorandum of association. By the shareholders in general meeting. Dr. G. MAHESWARAN/AP

Appointment by board of directors. Appointment in case of casual vacancy. Appointment of additional directors. Appointment of alternative directors. Appointment of nominee directors. 4) Appointment by proportional representation Dr. G. MAHESWARAN/AP

Vacation of office by director (1) The office of a director shall become vacant in case— (a) he incurs any of the disqualifications specified in section 164; (b) he absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board; (c) he acts in contravention of the provisions of section 184 relating to entering into contracts or arrangements in which he is directly or indirectly interested; (d) he fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested, in contravention of the provisions of section 184; (e) he becomes disqualified by an order of a court or the Tribunal; (f) he is convicted by a court of any offence, whether involving moral turpitude or otherwise and sentenced in respect thereof to imprisonment for not less than six months: Dr. G. MAHESWARAN/AP

REMOVAL OF DIRECTOR BY COMPANY TRIUNAL BY THE Dr. G. MAHESWARAN/AP

RESIGNATION BY A DIRECTOR A director may resign from his office by giving a notice in writing to the company and the board shall take note of same. The company shall intimate the registrar and shall also place the fact of registration in the report of the directors laid in the immediately following the general meeting by the company. A director shall also forward a copy of his resignation to the registrar along with the detailed reason within 30 days of resignation. The resignation shall take effect from the date on which the notice is received by the company or the date specified by the director in the notice, whichever is later. The directors who has resigned shall be liable even after his resignation for the offences which occurred during his tenure. Dr. G. MAHESWARAN/AP

LEGAL POSITION OF DIRECTORS AS A TRUSTEE AS AGENTS OF COMPANY AS MANAGING PARTNER AS AN OFFICER AS AN EMPLOYEE Dr. G. MAHESWARAN/AP

POWERS,DUTIES AND LIABILITIES OF DIRECTORS GENERAL POWERS VESTED IN BOARD OF DIRECTORS. SPECIFIC POWERS VESTED IN BOARD POWERS TO BE EXERCISE ONLY AT BOARD MEETINGS POWERS WHICH MUST BE EXERCISED BY BOARD UNANIMOUSLY Dr. G. MAHESWARAN/AP

CORPORATE SOCIAL RESPONSIBILITY DUTIES OF DIRECTORS STATUTORY DUTIES GENERAL DUTIES CORPORATE SOCIAL RESPONSIBILITY Dr. G. MAHESWARAN/AP

STATUTORY INSPECTING THE PROSPECTUS SIGNING THE PROSPECTUS PRESENTING ANNUAL STATEMENT HOLDING THE STATUTORY MEETING AND FORWARDING THE REPORT. CONVENING THE GENERAL MEETING. CONVENING THE EXTRA ORDINARY GENERAL MEETING DECLARING AND PAYING DIVIDEND PRESENTING ANNUAL ACCOUNTS SENDING COPIES TO REGISTRAR Dr. G. MAHESWARAN/AP

LIABILITIES OF DIRECTORS TOWARDS COMPANY TOWARDS OUTSIDERS CRIMINAL LIABILITY Dr. G. MAHESWARAN/AP

TOWARDS COMPANY TOWARDS OUTSIDERS 1. For ultra vires act. 2. For negligence. 3. For committing a breach of trust. 4. For trust. 1.For ultra vires act 2.As agents 3. In relation to allotment 4.In respect of allotment from stock exchange TOWARDS OUTSIDERS Dr. G. MAHESWARAN/AP

CRIMINAL LIABILITY Section 34:Untrue or misleading statements stated in prospectus or where any inclusion or omission of any matter is likely to mislead- Every person who authorizes the issue of such prospectus shall be liable. Section 36: Knowingly or recklessly making any statement, promise or forecast which is false, deceptive or misleading, or deliberately conceals any material facts, to induce another person to enter into, or to offer to enter into any agreement: (i)with a view to acquiring, disposing of, subscribing for, or underwriting securities, or (ii) the purpose or the pretended purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the value of securities, or (iii) with a view to obtain credit facilities from any bank or financial institution. Any person making such promise shall be liable. Dr. G. MAHESWARAN/AP

THANK YOU MADE BY Dr.G.MAHESWARAN 6/13/2018