SGT UNIVERSITY

Company Law

Topic – Appointment, Powers, and duties of Directors and

Types of Meeting of the Company.

NAME KAVINESH RM

ENROLLMENT NUMBER 211202008

COURSE LLM (CORPORATE LAW)

First Semester

SUBMITTED TO Prof. Mahima Kaushik

 Table of Content

S.No. Content Page No.

1. Director 1

2. Appointment of Directors 1

3. Powers and Duties of Directors 2-5

4. Types of Meeting 5-7

5. Power of NCLT to call the AGM 7

6. Power of NCLT to call the EGM 7

7. Calling of Extraordinary General Meeting 8

8. Bibliography 9
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Director

It is pertinent to mention that the term “Director” at this juncture must be understood as
mentioned under the Companies Act, 2013. Where it has been derived under Section 2(34) as
mentioned below,

2(34) ―director‖ means a director appointed to the Board of a company;1

It is well known that Company is an artificial legal person and it cannot compose itself. So, it
needs certain mechanics to protect it as well as investors, Indian law enables this by
appointment of DIRECTORS as the agent of the Shareholders.

Even though the company is a legal person and bears all the rights of a Natural person, it
cannot post a letter or type an e-mail. Hence management and ultimate control of the affairs
are generally entrusted to the Directors who are natural persons.

Also, it is to be stated that a manager or any other managerial personnel, is, however, not a
director – pronounced by Andra Pradesh High Court in Deen Dayalu v. Sri B.P. Reddy
(1984) 2 Comp. LJ 396.

Appointment of Directors

As per Section 149 (1), only individuals are to be Directors.

Every Company shall have a Board of Directors consisting of individuals as

Directors. This section insists that a legal person or any other association or firm cannot be a
director of a Company. Only a natural person can be a director of the company.

Section 149 (1)(a) states that

 Every public company shall have at least three directors,

 Every private company must have at least two directors,
 Every one-person company shall have one director.

The object of this section is to provide a dual control on the management. The Companies
Act also provides a number of provisions designed to ensure that the offices of director do not

1
https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
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fall into the same hands-on the companies with only one director. Of course, OPC is an
exception.

Section 149 (1)(b) states that

A company shall have a maximum of fifteen directors. However, a company may

appoint more than fifteen directors after passing a special resolution. This section ensures that
the numbers of directors are not out of proportion to the size and nature of the business.

Exemptions

In the case of Section 8 Companies, section 149(1) and first proviso to sub-section (1) shall
not apply. i.e., provisions of the minimum director are not applicable to a section 8 company
and it can appoint more than 15 directors without passing a special resolution.

In the case of Government Companies, section 149 (1)(b) and first proviso to section 149(1)
shall not apply. Provisions of the maximum director are not applicable to a government
company and it can appoint more than 15 directors without passing a special resolution.

Powers and Duties of Directors

Under section 179 and 166 of the Companies Act, 2013 states the powers and duties of a
director of a company respectively.

Power exercisable by the board

The Board of Directors of a Company shall be entitled to exercise all such powers, and to do
all such acts and things, as the company is authorized to exercise and do. The powers of the
board are co-extensive with the powers of the company. Whatever the company can, the
board can do.

Power not exercisable by the board

The board shall not exercise any power or do any act or thing which is directed or required,
whether by,

 Companies Act or
 Any other Act or
 By the memorandum or
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 By the Article of Association or

 Otherwise, to be exercised or done by the company in general meeting

Powers exercisable subject to the provisions of

 Companies Act or
 Any other Act or
 By the memorandum or
 By the Article of Association or
 In any regulations not inconsistent therewith and duly made thereunder, including
 Regulations made by the company in general meeting

Restrictions on the Power of the Board

No regulation made by the company in general meeting shall invalidate any prior act of the
Board which would have been valid if that regulation had not been made.

Power exercisable only at the Board meeting [Section 179(3)]

The Board of Directors of a company shall exercise the following powers on behalf of the
company by means of resolutions passed at meetings of the Board, namely:

(a) to make calls on shareholders in respect of money unpaid on their shares;

(b) to authorize buy-back of securities under section 68;

(c) to issue securities, including debentures, whether in or outside India;

(d) to borrow monies;

(e) to invest the funds of the company;

(f) to grant loans or give guarantee or provide security in respect of loans;

(g) to approve financial statement and the Board ‘s report;

(h) to diversify the business of the company;

(i) to approve amalgamation, merger or reconstruction;

(j) to take over a company or acquire a controlling or substantial stake in another company;

(k) any other matter which may be prescribed:

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Provided that the Board may, by a resolution passed at a meeting, delegate to any committee
of directors, the managing director, the manager or any other principal officer of the company
or in the case of a branch office of the company, the principal officer of the branch office, the
powers specified in clauses (d) to (f) on such conditions as it may specify:

Provided further that the acceptance by a banking company in the ordinary course of its
business of deposits of money from the public repayable on demand or otherwise and
withdrawable by cheque, draft, order or otherwise, or the placing of monies on deposit by a
banking company with another banking company on such conditions as the Board may
prescribe, shall not be deemed to be a borrowing of monies or, as the case may be, making-of
loans by a banking company within the meaning of this section.2

Section 166 of the Companies Act, 2013

1. Act in accordance with the Act and AoA - Subject to the provisions of this Act, a
director of a company shall act in accordance with the articles of the company.

2. Act in Good Faith – A director of a company shall act in good faith in order to
promote the objects of the company for the benefit of its members as a whole, and in
the best interests of the company, its employees, the shareholders, and the community
and for the protection of the environment.

3. Care, skill, and diligence – A director of a company shall exercise his duties with due
and reasonable care, skill and diligence and shall exercise independent judgment.

4. Conflict of exercise – A director of a company shall not involve in a situation in

which he may have a direct or indirect interest that conflicts, or possibly may conflict,
with the interest of the company.

5. Undue advantage or gain over the company – A director of a company shall not
achieve or attempt to achieve any undue gain or advantage either to himself or to his
relatives, partners, or associates and if such director is found guilty of making any
undue gain, he shall be liable to pay an amount equal to that gain to the company.

2
https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
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6. Prohibition of the assignment of office – A director of a company shall not assign his
office and any assignment so made shall be void.

Penalty

If a director of the company contravenes the provisions of this section such director shall be
punishable with a fine which is One lakh to Five lakh rupees.

Recent Landmark Judgment:

In Recent Case, Rajeev Saumitra Vs. Neetu Singh I.A.NO. 17545 of 2015. CS (OS) NO.2528
OF 2015 January 27, 2016

The Delhi High Court held that, Director carrying competing business breaches fiduciary
duty, imposes restriction, interprets Sec. 166 of the Companies Act.

Types of Meeting

A Company being an artificial person cannot compose itself. So it needs certain ways to
protect itself as well as the interest of the investors. Indian law enables this by a golden term
namely “shareholders meeting”. The General Meeting is the forum of shareholders which
paves way for self-protection. Collective wisdom is always superior to individual
intelligence. On such fact, Shareholders’ meetings are placed with grander admiration.
Company law gives a platform for such meetings and its proceedings in Section 96 – 122.

There are two types of Meetings – Annual General Meeting (AGM) & Extraordinary General
Meeting.

Annual General Meeting:

Every Company (other than one person company) to hold Annual General Meeting each year.
To ‘hold’ a meeting means not only to convene it but also complete it by holding it. Furthere
AGM should be held each year, i.e., from 1st January to 31st December.

A meeting Adjourned to next calendar year does not become a meeting of that year – Sree
Meenakshi mills Co. Ltd v Asst. Registrar of Joint Stock Companies [1938]8 Como Cas
175 (Mad)

First Annual General Meeting – The First Annual General Meeting shall be held within a
period of 9 months from the closing of the first financial year. If a company holds its first
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annual general meeting as aforesaid, it shall not be necessary for the company to provide any
extension of time for holding its first annual general meeting.

Subsequent annual general meeting – Subsequent annual general meeting shall be held
within a period of 6 months of the closure of financial years. Registrar has the power to grant
an extension of time for holding an annual general meeting by a further period of 3 months,
provided there are special reasons justifying the extension of time. There should not be a gap
of not more than fifteen months between two annual general meetings.

However, the AGM of the unlisted company may be held at any place in India if consent is
given in writing or by electronic mode by all the members in advance. The Central
Government may exempt any company from the provisions of sub-section (2) of section 96,
subject to such conditions as it may impose.

Corporate incorporated under section 8: The time, date, and place of each annual general
meeting are decided upon beforehand by the Board of Directors having regard to the
directions, if any, given in this regard by the company in its general meeting.

The distinction between the above-mentioned meetings:

Basis EGM AGM

All general meetings of the Annual General Meeting is
company with exception of the to be convened pursuant to
Meaning
AGM called Extraordinary General Section 96 and once in a
Meeting calendar year.
AGM can be held only at the
Registered office of the
company or at some other
EGM can be held anywhere in
Place place within the city, town
India.
or village in which the
registered office of the
company is situated.
EGM can be held on any day
Every AGM shall be held on
including National Holiday.
Day of holding any day other than a national
However, EGM by requisitionists
holiday.
has to be held on a working day.
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In case of AGM, both

All business transacted at the EGM ordinary business businesses
Business
are special businesses and special businesses can
be transacted.

Following FOUR business are ordinary businesses:

1. The consideration of accounts, balance sheets, and reports of the board of directors
and auditors.
2. The declaration of dividend.
3. The appointment of directors in place of those retiring.
4. The appointment and fixing of the remuneration of auditors.

Power of NCLT to call the AGM (Sec.97 of 2013 Act)

In case of any default inholding annual general meeting of a company, the NCLT may, on the
application of any member of the company, call or direct the calling of an annual general
meeting.

To the general rule that a single shareholder cannot constitute a meeting, this section is an
exception, which clearly provides that the NCLT may also direct that one member of the
company presents in person or by proxy shall be deemed to constitute a meeting.

Power of NCLT to call the EGM (Sec. 98 of 2013 Act)

The NCLT to call meetings of members if, for any reason, it is impracticable to call a
meeting of a company other than an annual general meeting. The NCLT may order for calling
the meeting either suo motu or on the application of any director or of any member of the
company.

The tribunal can exercise its power, if, and only if, for any reason, it is impracticable to call a
meeting of a company. It is a condition precedent to the passing of an order by the Tribunal.

Punishment for default in complying with provisions of sections 96 to 98 of 2013 Act

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If any default is made in holding a meeting of the company in accordance with section 96 or
section 97 or section 98 or in complying with any directions of the Tribunal, the company
and every officer of the company who is in default shall be punishable with a fine which may
extend to one lakh rupees and in the case of continuing default, with a further fine which may
extend to five thousand rupees for every day during which such default continues.

Calling of Extraordinary General Meeting (Sec. 100 of 2013 Act)

By Board: The Board may whenever it deems fit call an extraordinary general meeting of the
company. An extraordinary general meeting of the company, other than of the WOS of a
company incorporated outside India shall be held at a place within India.

By Requisitionists: The Board shall call an extraordinary general meeting on receipt of the
requisition from the following number of members:

a) In case of a company having a share capital: members who hold, on the date of the
receipt of the requisition, not less than one-tenth of such of the paid-up share capital
of the company as on that date carries the right of voting;
b) In case of a company not having a share capital: members who have, on the date of
receipt of the requisition, not less than one-tenth of the total voting power of all the
members having on the said date a right to vote.

Conclusion:

Thus, it is deliberate that a company is only being composed through its directors and that is
the reason behind company law is being elaborate and keen over the provisions upon the
Directors of the company and to safeguard the interests vesting over the shareholders of the
company towards the company, General meeting is organized as per the provisions laid under
the Companies Act, 2013. Hence, the parts which play a vital role in company law has been
explained in brief in the present assignment.
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BIBLIOGRAPHY:

1. Companies Act, 2013

2. Indian Kanoon – Website
3. SCC online