Company Board of Directors Legal Environment of Business Law 30 April 2017 Saroj Shrestha

Minutes Written summary of the points discussed at a meeting. Minutes Book: It is a book of the records of the decisions. Such a book is of 2 kinds which is important for official purposes. 1. Minutes of the General Meeting 2. Minutes of the BoD Meeting The Agenda, discussed matters and passed resolutions in the general meetings and board of directors meetings should be recorded in different books of the minutes. . Saroj Shrestha

Board of Directors Elected by the Shareholder to run a company It is the executive body to apply the decisions made by the general meeting Day to day function as accordance to the AOA and Company Act. Somebody needs to act on behalf of the company. Saroj Shrestha

Board of Directors.. Appointment and numbers of Directors of a Pvt. Ltd. shall be as per the AOA. There must be a board of Directors consisting of at least 3 to maximum of 11 in Public company. The division of Power between the shareholders in GM and Directors are arranged in the AOA of the Company. While forming a BOD in the Public company: ONE independent director, where the total number of director is up to 7 and at least TWO independent directors where more than 7 Directors. Saroj Shrestha

Appointment of Directors By the AGM: By Promoters: The directors shall be appointed by promoters until the First AGM By BOD: In case there occurs any vacancy of the Director elected by AGM By Corporate Body: A Corporate body holding shares may appoint a director and it may also appoint an Alternative Director Alternative director: If any Director appointed unable to attend the board meeting he shall inform his alternative director and the BoD.

Qualification of Directors Share qualification of directors: Any person in order to qualify, as director of any company shall hold such number of shares in his name prescribed in the AOA. Competent to contract: Must be competent to contract because he is an agent to act on behalf of the company. He must be major by age, person of sound mind, not disqualifies by any law in force and not involved in any criminal offense of moral turpitude.

Disqualifications of Directors Under Sec. 89 of Company Act, 2063 One who is below 21 years of age in case of Public company; One who is of unsound mind or an insane; One who is declared insolvent and five years have not elapsed; One who is convicted for corruption or for an offence involving moral turpitude, The company Act has provided that in case of a private company a period of three years has not elapsed from the date of the expiry of such sentences

Cont… One who has any personal interest in any contract or agreement with the company or in the business or transaction of the company One who is a director, substantial shareholder, employee, auditor or advisor of another company with identical objectives or has personal interest of any kind in such a company. The Act provides that such a person of Pvt. Ltd. can be elected as director in another private company having similar objective, A shareholder, in whose case it has been decided that has been paid any amount payable to the company Saroj Shrestha

Cont.. One who has been punished in accordance with the sec. 160 and one year has not elapsed from the date of punishment or who is punished under sec.161 and 6 months has not elapsed form the date of such punishment A person who does not fulfill qualification as prescribed under the law in force applicable to the company operating any specific business or has any disqualification prescribed under such law One who is a director of a company which has not submitted the reports and returns to the office required under this Act for the consecutive thr Saroj Shrestha

Cont.. One who is a director receiving remuneration or any other facilities from another listed company except board sitting fee and actual cost involved for transportation and accommodation for attending such a meeting. Saroj Shrestha 5 December 2018

Disqualification of Independent Directors An incompetent person as referred to sec. 89(1) of the Company Act, 2063 A shareholder of the concerned company A person who has not experiences at least ten years in the related section or in the management of the company after obtaining at least graduation degree on any subject related to the business of the company or has not acquired the experience of at lest ten years in the related field after acquiring at least graduation degree on subjects of economics, finance, management, accountancy, statistic, commerce, business administration or law

Cont.. Official, auditor, employee of the company or where the period of three years has not expired from the date of the termination of service from the said position Close relative of officials of the concerned company An auditor of the company or his partner. Saroj Shrestha

Discharge of Directors If he suffers form any of the disqualification in respect of appointment to office of a director If a general meeting adopts a resolution to remove him from his office If his resignation from his office has been accepted by the BOD If he is convicted by a court for any offence involving dishonesty or bad faith concerning the business of the company If a person is against whom the court has decided that he has committed prohibited to be performed by a director under Company Act or failed to perform any duty required under the Act, Saroj Shrestha

Cont.. If a person is blacklisted by competent authority under the law in force for not paying the loan of bank or financial institution and period of such blacklisting has not expired. Before any person is disqualified from being appointed or from continuing as Director has shall be served with a notice to this effect in order to give him an opportunity to explain his case. (Principle of Nature Justice)

Terms of Office of Directors Private Company: No term of office of Directors of a private company is determined by the Company Act. It shall be as provided for in the AOA. Public Company: Maximum of 4 years under Sec. 90 (2) of Company Act, 2063 but under following conditions: #A Director appointed by GoN or a body corporate shall hold the office till the appointing body so desires #A Director appointed by GM shall hold office until AGM is held. #A Director appointed to fill up a casual vacancy shall hold the office for the remaining period of the term of office of Director.

Meeting of BOD Private Company: As prescribed by AOA Public Company : Shall be held at least 6 times in a year. But company Act clearly provides that the interval period between two meeting must not be more than 3 months. Director must be present in person No meeting shall be held unless it is attended by at least 51% of the total number of Directors Matters related to the notice as provided in AOA Notice may also be given through electronic means of communication. Saroj Shrestha

Responsibility and Liability of Directors Relationship of company and Director is based upon good faith and agency principle. Directors have to perform their duties and responsibilities on the fiduciary relation and for the interest of company No Director of a company can do anything to get personal benefits Act honestly and in good faith while discharging official responsibility and use the duty of care, skill and caution with reasonable prudence and skill. The loss and damage caused to the Company shall be recovered and realized who acts in badfaith Saroj Shrestha

Company Act, 2063 Reporting requirement Time Frame Amendment of MOA & AOA (Sec. 21.2) Allotment of Share (Sec. 31) Agreement of Pub. Company on IPO (Sec. 32.2) Report of Directors (Sec. 51.3) Report under 78 for Public Company/ Non profit Distribution Company Within 30 days Within 30 days after allotment of shares Within 7 Days 30 days prior to AGM or submission after 30 days of AGM Prior to 21 Days of AGM Saroj Shrestha

Cont.. Reporting requirement Time Frame Minute of AGM and Report under Sec. 80 Information of Directors (Sec. 92 (2)) Changes of Directors and Company Secretary (Sec. 107(2) ) Information about appointment of Auditor (Sec. 111) Within 30 days of AGM Within 7 days after appointment of Director and within 7 Days after its receipt. Within 15 days Saroj Shrestha

Cont.. Reporting requirement Time Frame Special resolution of Merger (177) Address of Company after registration (Sec. 184) Within 30 days Within 3 months Saroj Shrestha

If you have any questions or concerns, please discuss .. Thank you ! 20 August 2016 Saroj Shrestha