BOARD OF DIRECTORS

( ROLE AND
RESPONSIBILITIES )

Presented By:
Neha Sharma
Parul Bhardwaj
Ritika Sharma
 Board Of Directors
 Governing body (called the board) of an
incorporated firm. Its members (directors) are
elected normally by the owners or subscribers
(stockholders) of the firm (generally at an
annual general meeting or AGM) to govern the
firm and look after the subscribers' interests.

 The supreme executive authority in the control

of a company and its affaire resides in person
known as “Board of Director”
Appointment of directors:
The appointment and removal of directors is voted upon by the
shareholders in general meeting.
1)By the company (Secs. 255 to 257, 263 and 264)

2)By directors (Secs. 260, 262, and 313)

 as additional directors
 In a casual vacancy
 As alternate director
3) By third party
4)BY Central Govt. (Sec. 408)

Removal of directors:
5)Shareholders (Sec. 284)

6) Central Govt. (Sec. 388)

7)By Company Law Board (Sec. 402)

Members of the board usually include:
1) Inside directors or executive directors

2) Outside directors or non-executive directors.

 Roles of the board of directors
Establish vision, mission and values
Set strategy and structure
Delegate to management

Some other roles are:

 Manage, oversee and monitor the business;
 Select, compensate and replace senior executives;
 Review and, in some cases, approve corporate
financial objectives;
 Initiate and adopt corporate plans and actions;
 Initiate and adopt accounting changes;
 Advise officers and review corporate actions;
 Make shareholder recommendations.
Responsibilities and Duties of Directors
 The directors must always exercise their
powers for a 'proper purpose' – that is, in
furtherance of the reason for which they were
given those powers by the shareholders.
 Acting bona fide
 Unfettered discretion
 Directors must act with due skill and care.
 Directors must consider the interests of
employees of the company.
 Fiduciary duties
Duty Test for Whether Duty is
Met

Loyalty fair process (approval by

Non-interested directors) or
else burden on directors to
show entire fairness

Care business judgment rule

Disclosure disclose all material
information when seeking
shareholder approval, or
when a conflict of interest exists.

Extra care when selling company no clear test; careful scrutiny

of decision process