Company

Management

By Group 18
 Points covered:
Directors, Legal Position of Directors, Number of
1 Directors, Women Director

2 Independent Directors, Small shareholders’ Director

Qualification/ Disqualification of Directors, Director

3 Identification Number, Appointment of Directors

Number of Directorships, Vacation of Office of a

4 Director, Resignation of Directors, Removal of Directors
 Directors

• Section 2(34) defines directors as “A director

appointed to the Board of a company”.
• Directors collectively are called as “Board of
Directors” or “Board” [Sec. 2(10)].
• The Board of Directors is the top administrativ
e organ of the company.
 Legal Position of Directors
Directors are sometimes described as agents, sometimes as trustees and sometimes as ma
naging partners.

Directors as:

Managing
Agent Trustees Partner

The directors are neither agents nor managing partners nor trustees ,in th
e full sense of the team. They combine in themselves all these positions.
[Sec.2(59)]
 Number of Directors
The maximum limit of directors has been fixed at Fifteen. It can be increased by passing a
special resolution.

03 02
Public Company Private Company
Every public company must have Every Private Company must have
at least 3 Directors. at least 2 Directors.

01
One Person Company
Every One Person Company must
have at least 1 Director.
 Women Director
Such class or classes of companies, as may be prescribed, shall have at least
One woman director.
As per Rule 3 of Companies Rul
es,2014,the following class of c
ompanies shall appoint at least
one woman director :
 Every Listed Company
 Every Public Company
having:
A company incorporated under  Paid-up capital of ₹100
Companies Act,2013 is to compl Cr. Or more
y with this provision within 6 mont  Turnover of ₹300 Crore or
hs from date of its incorporation. more
 Independent Director
An Independent Director in relation to a company, means a director
other than managing director
a) Who,in the opinion of the Board, is a person of integrity
b) Who :
• Who is or was not a promoter of the company
• Who is not related to promoters or directors in the company
c) Who has or had no pecuniary relationship, other than remunerati
on or having transaction not exceeding 10% of his total income
d) None of whose relatives :
• Is holding any security of or interest in the company,
• Is indebted to the company
• Has given a guarantee or provided any security
• Has any other pecuniary transaction or relationship with the comp
any
 Independent Director
e) Who, neither himself nor any of his relatives :
• Holds or has held the position of a key managerial personnel o
r is or has been employee
• Is or has been an employee or a proprietor or a partner
f) Who possesses such other qualifications as may be prescribed

The other provisions of Sections 149 and 150 of the Companies Act,2013
relating to “independent directors”
1) Every listed public company shall have at least 1/3 of its total numb
er of directors as independent directors.
2) The Central Government may prescribe minimum number in case o
f any class of unlisted public companies.
3) Every existing company, which is required to have independent dire
ctors, shall appoint such directors within one year.
 Independent Director

4) An Independent Director shall not be entitled to any remuneration or

stock option.
5) Independent Director shall be appointed at a general meeting for a
term up to 5 consecutive years.
6) Independent Director is eligible for re-appointment for another term
of up to 5 years subject to performance evaluation by the entire Boar
d of Directors and passing of a special resolution by members and dis
closure of such appointment in the Board’s report.
7) No independent director shall hold office for more than two consecu
tive terms or cooling period of 3 years.
Small shareholders’ Director

• Section 151 of companies act and rule 7 of

companies rules, 2014 govern the appointment of
small shareholders.
• The appointment of the candidate of the small
shareholder shall take place only if it is approved by
an ordinary resolution of the shareholders at a
meeting
 Qualification of Directors

Generally no formal or special education, experience,

or skill is required to qualify to hold the office of a firm'
s director.

But if a director possesses special expertise or knowled

ge, he or she is expected to employ it to the firm's adv
antage.
 Disqualification of Directors
Section 164 states, that a person shall not be eligible for appointment as a director of a
company, if-

Adjudged to be of Has applied to be

Unsound Mind
01 02 adjudged insolvent

Convicted by a court and

Undischarged Insolvent
sentenced to at least six
03 04 month of imprisonment

If failed to pay any

call on his share 05 06 And much more…
Director Identification Number (DIN)

• According to the Companies (Appointment and

Qualification of Directors) Rule 2014, DIN means
an identification number allotted by the Central
Government to any individual, intending to be
appointed as director or to any existing director o
f a company, for the purpose of his identification
as a director of the company.
 Appointment of Directors
• Only individuals with a DIN allotted under Section 154 or any other prescribed Section can
be appointed as director.
• At least one director shall be a person who stays in India for a total period not less than 182
days during the financial year.

First Director Subsequent Directors

The first directors are usually
appointed by name in the articles,
where the articles do not provide
for the appointment of the first
directors, the subscribers to the
memorandum and shall be
deemed to be the first directors.
Subsequent Director means a Non-
Employee Director of DRS who
becomes a member of the Board
of Directors subsequent to the
Effective Date.
Appointment of Directors by the Board
The Board of Directors may appoint directors in the following circumstances:

A
B C
D
Appointment of Directors by Third Parties

• The articles may permit the third parties for the

appointment of director as their nominee, but the
number of directors so appointed should not
exceed one- third of the total number of directors
and they are not liable to retire by rotation.
• The third party means the Vendor, Banking
Company, Finance Corporation and Debenture
holders.
 Number of Directorships

Maximum Number of Directorship in Companies. A

person is allowed to be the Director of a maximum of
20 Companies simultaneously as per the Companies
act, 2013. Public companies directorship limit:
Maximum number of public companies in which a
person can be appointed as a director shall not
exceed 10.
 Vacation of Office of Director
[Sec. 167, as amended by the Companies (amendment) Act, 2017]

• He incurs any of the disqualifications specified in section 164;

• 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;
• 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;
• He fails to disclose his interest in any contract or arrangement in which he is
directly or indirectly interested;
•He becomes disqualified by an order of a court or the Tribunal;
 Resignation Of Director
[Sec. 168, as amended by the Companies (amendment) Act, 2017]

A director may resign by giving a notice in writing to the company

which should be further intimated to Registrar of Companies.

A director may send the copy of his resignation along with detailed
reasons to the Registrar of Companies within 30 days.
 Removal of Director

Removal of Directors

By Shareholders (Sec. 169) By Tribunal (Sec. 242)

Thank you
Group No. 18
Bcom prog.
Section A