Directors

Brains of the company

A person having control over the direction,

conduct and management or superintendence over the affairs of the company Only individuals can be directors. Public company three directors Private company two directors

Management and Administration

Director is a person who has control over the direction , conduct and management of the affairs of the company. According to Lord Cairns A company cannot act on its own . It can only act through directors, and the relation between the company and directors is that of Principal and agent.

Management and Administration

According to Companies Act 1956, Sec 2(13) A Director is defined as any person occupying the position of the director, by whatsoever name called. Only Individuals can be Directors

No Body corporate or Association or firm can be appointed as director of the company,

Management and Administration

Qualification of a Director
The Act prescribes no academic or professional qualification for a director. The Articles may provide what qualifications the companys directors must possess. Where the share qualification is prescribed by the Articles, the Act provides that the nominal value of qualification must not exceed Rs.5000/- or one share where its value exceeds Rs.5000/-.

Management and Administration

Disqualification of Directors Following persons are not eligible to be directors Persons of unsound mind An Undischarged insolvent

Powers
General powers of the Board

Powers to be exercised at board meetings

To issue debentures To invest the funds of the company To make calls on shareholders in respect of money unpaid on their shares

Powers to be exercised with the approval of

company in general meeting

Contd

To borrow money To contribute to charitable trusts To remit or give time for repayment of any debt due to the company by a director

Duties Fiduciary duties Duties of skill, care and diligence Attend board meetings Not to delegate his functions

Meetings
General meetings

Statutory meeting Annual General meeting Extraordinary meeting

Meeting of creditors and debenture holders Meeting of directors

Class meeting

Requisites of a valid meeting

Proper authority

Notice of meeting
Quorum of meting Chairman of meeting Minutes of meeting

Statutory Meetings (Sec 165)

Definition
The 1st General Meeting of the members of the company after the incorporation of the company to acquaint members with matters arising out of the promotion and formation of the company Company limited by shares Company limited by guarantee and having a share capital Not applicable to Private Limited Company Should be held between 1 months 6 months from the date at which the company is entitled to commence business Report has to be forwarded to every member at-least 21 days before the date of meeting

Applicability

Periodicity

Statutory Report

Statutory Meetings (Sec 165)

Content of Statutory Report
Total no of shares allotted, distinguished between fully &partly paid up

Total cash received from allotment under each category

Abstract of cash received and paid under certain categories up to a date not prior to 7 days of the date of the report, balance amount in hand Names, addresses and occupations of directors, auditors, manager & secretary and any changes in any of the aforesaid information since the date of the incorporation Extent to which under-writing contract has not been carried and the reason thereof Arrears if any due on calls from every directors and the manager Commission or brokerage paid or to be paid in connection with the issue of sale of shares or debentures to any directors or to the manager

Annual General Meetings (Sec 166)

Definition
AGM is the regular meeting of the members of a company held annually for the purpose of transacting Companys ordinary business. Once every year The gap between 2 AGM should not be more than 15 months Company may hold its 1st AGM within a period of not more than 18months from the date of incorporation The registrar may for special reason extend the period of AGM by a period not more than 3 months (except in case of 1st AGM). To Consider and adopt Audited Balance Sheet To declare dividend on shares To appoint Directors in place of those retiring by rotation To appoint Auditors and to fix their remuneration.

Frequency of Meeting

Ordinary Business

Annual General Meetings (Sec 166)

Power of the Central Government (section 167)

The Central Government on an application from any member of the company may call or give direction to call a AGM if the same has not been held as per the provision of section 166

Penalty for default in complying with section 166 & 167 (section 168)

The company and every officer of the company who is in default shall be punishable with a fine which may extend upto Rs 50,000 In case of continuing default a further fine of Rs 2,500 for each day of default

Annual General Meetings (Sec 166)

Every AGM shall be called for :
At a time during business hours On a day that is not a public holiday Shall be held either at the registered office of the company or some other place within the city, town or village in which the registered office of the company is situated

Exceptions
The central government may exempt any class of company from the requirements mentioned above subject to conditions as it may impose A public company or a private company which is a subsidiary of a public company may by its article fix the time for its AGM and may also in one AGM fix the time for the subsequent AGM A private company which is not a subsidiary of a public company may in a like manner and also by a resolution agreed to by all the members thereof, fix the time and place for its AGM

Extra Ordinary General Meetings (Sec 169)

Every general meeting other than the statutory meeting and the annual general meeting or any adjournment thereof, is an extraordinary general meeting Such meeting is usually called by the Board of Directors for some urgent business which cannot wait to be decided till the next AGM. Every business transacted at such a meeting is special business.

BOD can call EGM if it has received a requisition from such number of members of the company as mentioned below:
Company having share capital members holding 1/10th of the paid up capital of the company ( voting rights) at the date of the deposit of the requisition Company not having share capital members having 1/10th of the total voting power of all members as at the date of the deposit of the requisition

Notice of Meetings
Contents and manner of service of notice Section 172
Meeting can be called by giving not less than 21 days notice Meeting can be called with shorter notice, if consent is accorded there to * AGM By all members entitled to vote thereto Company having share capital Members holding 95% of the paid up share capital

* Other meeting
Company not having share capital

Members having 95% of the total voting rights

An explanatory statement of the special business must also accompany the notice calling the meeting. Notice should also give the nature and extent of the interest of the directors or manager in the special business, as also the extent of shareholding interest in the company of every such person

Quorum of Shareholders Meetings

Quorum for meeting - section 174
Unless the article provides for a larger number, the Quorum for the meeting : * Public ltd. Company 5 members personally present * Private Ltd. Company 2 members personally present
If Quorum not present within 30 minutes of the time fixed for the meeting : * Meeting called on requisition from members * Other meetings shall stand adjourned to the same day in the next week, at the same time & place or such other day at such other time & place as Board may decide members present shall form the quorum meeting stands dissolved

* In case of adjourned meeting

Board Meetings
Frequency of Meeting (section 285)
At least once in every 3 calendar months and 4 meetings in every year If 4 BMs are held in a calendar year, one in each quarter, the interval between 2 meetings may be more than 3 months Section 25 company (An association not for profit) needs to hold only one meeting in 6 months

Notice of the Meeting (section 286)

Notice must be given in writing to every director for the time being in India and at the usual address in India to every other director

Agenda of the Meeting

Unless otherwise required by the article, no agenda required In some matters prior intimation of the business to be transacted is required i.e. appointment of managing director (Sec 316), inter - company loans & investment (sec 372A) appointment of a person as a manager who is already a MD in some other company (sec 386)

Board Meetings
Quorum for Board Meetings

1/3 rd of the Boards total strength or 2 directors which ever is higher Total strength for the purpose means total strength of the Board as reduced by the number of positions vacant at that time Article of association can always fix a higher quorum but not lower number The quorum shall consist of fully qualified and disinterested directors only. Number of the interested directors to 2/3rd of the total strength, quorum shall be the remaining directors present at the meeting being not less than 2.

Chairman of the Board Meeting

The Board shall elect one of the directors as its chairman

Voting at Board Meeting

Question decided by majority of votes Chairman will have the right exercise casting vote

Resolutions
Resolutions mean decisions taken at a meeting. A motion, with or without amendments is put to vote at a meeting. Once the motion is passed, it becomes a Resolution.
Special Resolution
A special resolution is one which is passed by a 75 % majority only Special resolutions are needed to decide on important matters of the company Examples where special resolutions are required are :a) To alter the objects clause of the memorandum. b) To alter / change the name of the company c) To alter the articles of association d) To buy back Shares issued.