COMPANY

MANAGEMENT &
DIRECTOR
PART 1
 COMPANY MANAGEMENT

• The management of a company is generally ,vested
upon a body of persons called “ the board of directors”.
Being an artificial person ,the company has to rely on
a body of natural persons for its administration.
• The law also validates that the company shall run its
business through the board of directors or any other
• Section 2(f) of the Company Act,1994,Direcor includes any person
occupying the position of director by whatever name called.
• So ,what we find from the above definition, director is a person
working for the company holding the liability of a director
irrespective of the name by which he is called. We identify a
person to be director of a company based on the functions he
performs and the responsibility he carries.

persons authorized by it under the common seal of the • Section 90 says only a natural person can be appointed as a
company. Directors are considered key in the director ,so no body corporate ,association ,firm or any other
juristic person shall not be eligible to be a director.
management of company and they possess a lots
powers in terms of discharging their duties both under
the law and the memorandum of association of the
company concerned.
 ROLE OF SHAREHOLDERS
• The shareholders of the company are
considered the owner of the company.
However their role in the functioning of
the company is very limited.
• The board of directors, on behalf of the
shareholders in fact is in the authority to
decide on the company’s affairs.
• The board of directors employs persons
to look after day to day affairs of the
company known to be the employees of
the company under the Managing
Director, who is also an employee of the
company.
 NUMBER OF DIRECTORS

• However ,the number of directors may be

• The number of directors and the names of
fixed by the articles of the company subject to
the first directors shall be determined by
the minimum number of directors fixed by
the majority of the subscribers to the
law.
memorandum.
• The company has the right to increase or
• Under section 90, every public company
reduce the number of directors by a resolution
shall have at least three directors.
passed in a general meetings of the company.
Whereas, in case of other companies the
minimum number of directors must not be
less than two.
 RESTRICTIONS REGARDING THE NUMBER
OF DIRECTORS
• No one is eligible to hold the position of
director in more than twenty companies at a
time. If someone is appointed as director of
more than twenty companies ,his appointment
will turn ineffective as long as he continues to
hold the directorship company or companies
in excess of twenty. But if he leaves the his
directorship from those in excess of twenty
within a period of fifteen days his
appointment may be regularized.
• Exclusion of certain directorship:-
Though a person shall not be eligible to hold the
position of director in more than twenty companies but
in calculating the number the following shall be
excluded:-
(i) A private company which is neither subsidiary nor a
holding of a public company
(ii) An unlimited company
(iii) An alternative director of a company
(iv) An association not carrying on business for profits.
 APPOINTMENT OF DIRECTORS :
(i) Subscribers to the memorandum act as
director: Since at this stage, no director is
appointed formally, so the subscribers of the
memorandum shall be deemed to be the
directors.
Section 91 says that the subscribers of the
memorandum shall be deemed to be the
directors until the first directors are
appointed.
(ii) First Directors : The names of the first
directors are contained in the article of
association. When the articles of association
are prepared, the names of the first directors
are included therein.
The number of the directors and the names
of the first directors shall be determined in
writing by a majority of the subscribers of
the memorandum of association.
 APPOINTMENT OF DIRECTORS :

(iii) Directors appointed subsequently by (iv) Additional directors : In addition to

the members: The subsequent directors appoint the regular directors, the board of
shall be appointed by members of the directors may appoint additional directors
company. The basis of such appointment if necessary who shall hold office till the
lies in section 91(1)(b) wherein its said that company’s next annual general meeting.
the directors of the company shall be
elected by the members through general
meeting.
 APPOINTMENT OF DIRECTORS :
(v) Appointment of directors retired by rotation: The
directors appointed by the members of the company in a
general meeting shall retire from the office by rotation at the
subsequent general meeting.
In case of such retirement , the company may reappoint the
retiring director or some other person to fill the vacancy.
If the offices of the vacant post of director are not filled in at
that general meeting , the meeting shall remain adjourned till
the same day in the next week at the same time and place and
if again at that meeting vacant position is not filled in, the
retiring director shall be deemed to have been reappointed at
the adjourned meeting.
(vi) Appointment of directors due to casual vacancies:
if the office of a director is vacant before the expiry of the term,
the vacancy may be filled in by the appointment of another
director through the general meeting unless the procedures of
such appointment is provided by the articles of the company.
And, such director shall hold office till the period in which his
predecessor would have held the office.
(vi) Appointment of alternative director: Due to the casual
vacancy or the temporary absence of a director ,the board of
directors may appoint an alternative director where the regular
director is likely to be absent from the board meeting for a period
not less than three consecutive months.
 APPOINTMENT OF DIRECTORS :
(viii) Appointment of directors by third
parties: one third of the total number of
directors of a public company or a private
company which is subsidiary of a public
company who are liable to retire may be
appointed if the articles authorizes by the
third parties who are closely connected with
the business of the company like debenture
holders or a financing corporation.
(IX) Appointment of directors by the
Government : if it is provided by the
articles of the company or on the
application of the shareholders ,the
government may appoint one or more
directors to the company.
 SHARE QUALIFICATION
• Share qualification is the holding of a
certain number of shares by the directors
prescribed in the articles which is
considered as the qualification of that
directors which may be at least one share
in the company.
• It is for the directors to have some
personal interests in the company.
• It shall be the duty of the directors to hold qualification share
specified in the articles. If the director doesn’t possess the
number of shares fixed as qualification shares ,he is to acquire
such number of shares within sixty days after his appointment
or such shorter time as specified in the articles. A joint holding
of shares also shall be sufficient for share qualifications.
• Effects of Non-obtaining qualification shares: (i) his office
shall be vacated.
(ii) u/s 97(2)he shall be liable to a fine not exceeding two
hundred taka for every day out of the period of sixty days during
which he was not having that qualification share after the
appointment.
 DISQUALIFICATION OF DIRECTORS

(i) Unsoundness of mind (i) Illness : Due to illness if incapable to perform duties,
the directorship may be ceased . In case of
(ii) Insolvency
involuntary absence and occasional illness which is
(iii) Failure to pay call in shares: u/s 94(1) a person shall curable in a shorter time, his office shall not be
not be eligible to become director if he has not paid vacated.
any call in respect of his holding of shares ,whether
(ii) Removal by the government : if the articles so provide,
single or joint within six months from the day of
the government may remove any director for any
such call.
reasonable and satisfactory ground, corruption etc.
(iv) Minority
(iii) Additional disqualification in case of private company:
(v) Conviction : if a person is convicted of offences An independent private company may add any other
involving moral turpitude would be disqualified to be disqualification for the appointment of director ,but it
appointed as director. must be contained in the articles u/s 94(1)
 QUALIFICATIONS OF DIRECTORS

(i) Must possess qualification share Apart from the above qualifications, section 92 says
that in regard to the qualification of a director :
(ii) Sound mind
(i) Consent to act as director: a person shall not be
(iii) Solvent capable of being appointed as a director of a
company unless he has signed and filed with the
(iv) Pay call in time Registrar a consent in writing to act as a director.

(v) Must be in the age of majority (ii) In case of a company having share capital ,he is
to sign in the memorandum and agree to
(vi) High morale character subscribe for a number of shares not less than
qualification shares.
THANKS!!!