1. Meaning of a Director

U/S 2(13) of the Companies Act,1956 “ Director includes any person occupying the position of a director by whatever name called”.


  1. Deemed or Shadow Director:

“Such persons do not acquire any rights or powers in connection with the management of the company”. They remain outside and yet control the company via medium or arrangement.


  1. Independent Director:

As per Kumarmangalam Birla Committee,” One who does not have a pecuniary relationship or transactions with the company, its promoters, its management or its subsidiaries, which in the judgement of the board may affect the independence of the judgement”.


  1. Who can be appointed as a Director?

U/S 253: No body corporate, association or firm can be appointed director of the company. Only an Indivudual can be appointed as director.


  1. Qualifications for Directors:

No academic qualifications have been prescribed by the act, only share qualification is provided for, that too only one share of which the nominal value must not exceed Rs. 5000.

This qualifying share must be procured within 2 months else the candidature stands cancelled.


  1. Disqualifications of a Director: U/S 274: the following are grounds on which a person can be disqualified for the post of directorship:-
    1. Unsound Mind
    2. Insolvent
    3. Convicted by the Court
    4. Calls due
    5. Disqualifies as per court/tribunal order
    6. Person is already a director of a company which has
      1. Not filed Annual Returns for any continuous 3 years
      2. Has failed to repay its deposit or interest on the due date or redeem its debentures on the due date.


  1. Legal Position of Directors:
    1. Directors as Agents
    2. Directors as Trustees
    3. Directors as Managing Agents


  1. 8.       Appointment of Directors:
    1. Appointment of First Directors
    2. Appointment at General Meeting
    3. Appointment by Board of Directors
      1. Additional Directors (U/S 260)
      2. Filing up of casual vacancy (U/S 262)
      3. Alternate Directors (U/s 313)
      4. Appointment by third parties
      5. Appointment by Central Government


  1. 9.       Appointment of Directors:
    1. Simple Majority
    2. Proportional Representation(U/S 265)
      1. Single transferable vote
      2. Cumulative Voting


  1. 10.   Appointment of Directors by Third Parties:

Directors who are appointed when the Government, foreign collaborators , holding companies, financial institutions or other lenders nominate a director to represent their interest on the board.


  1. 11.   Number of Directorships:

U/S: 275: a person cannot hold office at the same time as director for not more than 15 companies.

U/S 278: the following are not to counted in computing the above number:

  1. Private Companies
  2. Unlimited Companies
  3. Association not carrying on business for profit or which prohibit payment of dividend
  4. Alternate directorships
  5. Foreign Companies


  1. 12.   Removal of a Director:
    1. Removal by Shareholders
    2. Removal by Central Government
    3. Removal by CLB


  1. 13.   Powers of the Board of Directors:

U/S 291: Provides for the General Powers of BOD: U/S 292(1) BOD shall exercise the following powers by means of passing reolution at the meetings of the board:

  1. Calls due
  2. Buy back under Section 77A
  3. Issue Debentures
  4. Borrow money’s
  5. Invest funds of the Company
  6. Make loans subject to Sections 292 and 372A

U/S 292:

  1. Fill casual Vacancy U/S 262
  2. Sanctioning a contract in which a director is Interested U/S 297
  3. Rate of dividend
  4. Political contributions (U/S 293A)


  1. 14.   Interested Director:

U/S 297: A director who is interested in a transaction of the company must disclose his interest to the board.


  1. 15.   Duties of Directors:
    1. Statutory duties
      1. File return of allotment
      2. Not to issue irredeemable preference shares or shares redeemable after 20 years
      3. To disclose interest
      4. To disclose receipt of transfer of property
      5. To disclose receipt of compensation from transfer of shares
      6. Duty to attend Board meetings
      7. To convene SM, AGM and EOM etc..


  1. General Duties
    1. Duty of good faith
    2. Duty of care
    3. Duty not to delegate




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