Directors

Sources-Companies (Amendment) Act, 2017 dated

03.01.2018.
(APPOINTMENT AND QUALIFICATION OF
DIRECTORS) AMENDMENT RULES, 2017
 Lecture Objectives
• Identify the provisions related with directorship
• Identify the various new emerged types of directors
• Comprehend the legal procedure for appointment and fixing remunerations
limits directors
• Comprehend about the true position of the Directors , power and duties of
directors
 Definitions
 As per Section 2(34) of
Companies Act 2013
Director means a director
appointed to the Board of a
Company.

“Board of Directors” or
“Board”, in relation to a
company, means the
collective body of the
directors of the company;
 Minimum Directors Required
in Company
• One Person Company:-        One Director.
• Private Limited Company:- Two Directors.
• Public Limited Company:- Three Directors.
• Every company shall have at least one director who stays in India for a
total period of not less than 182 days during the financial year:
• Provided that in case of a newly incorporated company the requirement
under this sub-section shall apply proportionately at the end of the
financial year in which it is incorporated.
• Every listed public company shall have at least one-third of the total
number of directors as independent directors and the Central
Government may prescribe, the minimum number of independent director
in case of any class or classes of public companies .
Maximum Directors Required
in Company

• Maximum 15 directors can be appointed in

any format of Company (OPC, Public,
Private).
 Increase or reduction in number of
directors
NOTE: The Articles of a company may prescribe the limit for
no. of directors for its Board of Directors
(i) The number fixed by AoA can be Increased or decreased
within maximum limits ( i.e 15 as specified under the Act ) by
Ordinary Resolution of the company in general meeting.
(ii) By passing Special Resolution Company can increase the
number of Directors beyond 15.( No central govt. approval is
required )
Provided Further that such class or classes of companies as may
be prescribed, shall have at least one woman director.

.
 Number of Directorships
The maximum number of directorships a person can hold is 20.
•Provided that the maximum number of public companies in which a
person can be appointed as a director shall not exceed 10.
•Explanation I.  For reckoning the limit of public companies in which a
person can be appointed as director, directorship in private companies
that are either holding or subsidiary company of a public company shall
be included.
•Explanation II.—For reckoning the limit of directorships of twenty
companies, the directorship in a dormant company shall not be
included.
Source - http://www.mca.gov.in/SearchableActs/Section165.htm
1.Residential Director –(as per 2013 act)
According to Act – “Every company shall have at least one director who
has stayed in India for a total period of not less than 182 days in the
previous calendar year.”
 2. Additional Director –(as per 2013 act)
According to the Act – “The articles of a company may confer on its Board of
Directors the power to appoint any person, other than a person who fails to get
appointed as a director in a general meeting, as an additional director at any
time who shall hold office up to the date of the next annual general meeting or
the last date on which the annual general meeting should have been held,
whichever is earlier.”
This definition says that the articles of the company has authorized the board of
directors to appoint the additional directors whenever needed,
Term -this additional director would hold the office up to the date of next AGM.
3. Alternate Director –(as per 2013 act)
According to the Act – “The Board of Directors of a company may, if so
authorized by its articles or by a resolution passed by the company in general
meeting, appoint a person, not being a person holding any alternate
directorship for any other director in the company, to act as an alternate
director for a director during his absence for a period of not less than three
months.”
This director is to be specifically appointed when the original director or the
whole time director is not present in the office due to any of the factors.
Term of office: The alternate director shall hold the remaining period office of
the original director in whose place he is appointed.
• Small Shareholders Director (Sec 151) (as per 2013 act)
Every Listed Company may have one director elected by small shareholders
"small shareholders" means a shareholder holding shares of nominal value of
not more than Rs.20,000/- or such sum as may be prescribed

Appointment: A listed company may by notice to not less than 1000 or

1/10th(one-tenth) of total small shareholders which ever is lower shall have a
Small Shareholders director appointed by them. Or A listed company may suo
moto opt to appoint a director representing small shareholders.

Term of office: The term of office of small shareholders shall not be more than a
period of 3 consecutive years and he shall not be liable to retire by rotation. On
the expiry of the tenure, such director shall not be eligible for re-appointment
4. Women Director  (as per 2013 act)–
According to the Companies Act 2013, some companies have been compulsory
ordered to get at least 1 director as the women director. The list of companies
who are required to get there director as women are:
A listed Company
Any Public company having –
Turnover of Rs. 300 crore or more
Paid up capital of Rs. 100 crore or more
5.  Independent Director –(as per 2013 act)
Independent director basically means the director other than Whole time director,
Managing Director, or Nominee Director. There are certain reserved criteria for
companies to appoint independent directors.
•Every listed public company shall have at least one-third of the total number
of directors as independent directors  and the Central Government may prescribe, the
minimum number of independent directors in case of any class or classes of public
companies.
•Explanation.—For the purposes of this sub-section, any fraction contained in such one-
third number shall be rounded off as one.
The following class or classes of companies shall have at least two directors as
independent directors –
(i) the Public Companies having paid up share capital of 10 crore rupees or
more; or
(ii) the Public Companies having turnover of 100 crore rupees or more; or
(iii) the Public Companies which have, in aggregate, outstanding loans,
debentures and deposits, exceeding 50 crore rupees:

Read more at: 

http://www.caclubindia.com/articles/types-of-directors-under-companies-act-2013-25510.asp
•Source - (APPOINTMENT AND QUALIFICATION OF DIRECTORS) AMENDMENT RULES, 2017
6.  Nominee Director –(as per 2013 act)
They can be appointed by certain shareholders, third parties through contracts, lending
public financial institutions or banks, or by the Central Government in case of oppression
or mismanagement.
7.  Shadow Director –(as per 2013 act)
Shadow director is the new term which has been arrived which means that the person
who is not officially appointed by the board but he/she gives such advice to the
directors which they are accustomed to follow except when such shadow director
provides the same in his professional capacity
According to companies act “officer” includes any director, manager or key managerial
personnel or any person in accordance with whose directions or instructions the Board of
Directors or any one or more of the directors is or are accustomed to act;
A Shadow Director is an “officer” within the definition of the terms in Section 2 (59) of
the Companies Act, 2013, as it includes, “any person in accordance with whose
directions or instructions the Board of Directors or any one or more of the Directors is or
are accustomed to act..

( Source- Definition is given in sec2 (59) companies act 2013

http://www.mca.gov.in/SearchableActs/Section2.htm)
 8. Managing Director- (as per 2013 act)
“managing director” means a director who, by virtue of the articles of a
company or an agreement with the company or a resolution passed in its
general meeting, or by its Board of Directors, is entrusted with substantial
powers of management of the affairs of the company and includes a
director occupying the position of managing director, by whatever name
called.

The power to do administrative acts of a routine nature when such as the power to affix the common seal of
the company to any document or to draw and endorse any cheque on the account of the company in any bank
or to draw and endorse any negotiable instrument or to sign any certificate of share or to direct registration of
transfer of any share, shall not be deemed to be included within the substantial powers of management;
9. Manager (as per 2013 act)
“manager” means an individual who, subject to the superintendence, control
and direction of the Board of Directors, has the management of the whole, or
substantially the whole, of the affairs of a company, and includes a director or
any other person occupying the position of a manager, by whatever name

called, whether under a contract of service or not ;

10.Non-executive director
The non-executive director plays an important role in providing objective judgement
independent of management on issues facing the company. Not being involved in the
management of the company defines the director as non-executive. Non-executive directors
are independent of management on all issues including strategy, performance, sustainability,
resources, transformation, diversity, employment equity, standards of conduct and evaluation
of performance.

An individual in the full-time employment of the holding company is also considered a non-
executive director of a subsidiary company unless the individual, by conduct or executive
authority, is involved in the day-to-day management of the subsidiary

Other names: 
External director, independent director, outside director, or director at large.

Source - https://www2.deloitte.com/content/dam/Deloitte/za/Documents/governance-risk-compliance/ZA_TheDifferentTypesOfDirectors_24032014.pdf
11.Executive director
Involvement in the day-to-day management of the company or being in the
full-time salaried employment of the company (or its subsidiary) or both,
defines the director as executive. An executive director, through his or her
privileged position, has an intimate knowledge of the workings of the company.
There can, therefore, be an imbalance in the amount and quality of information
regarding the company’s affairs possessed by executive and non-executive
directors. Executive directors carry an added responsibility. They are entrusted
with ensuring that the information laid before the board by management is an
accurate reflection of their understanding of the affairs of the company

Source - https://www2.deloitte.com/content/dam/Deloitte/za/Documents/governance-risk-
compliance/ZA_TheDifferentTypesOfDirectors_24032014.pdf
• In law there is no real distinction between the different categories of
directors. Thus, for purposes of the Act, all directors are required to comply
with the relevant provisions, and meet the required standard of conduct
when performing their functions and duties. It is an established practice,
however, to classify directors according to their different roles on the board
“key managerial personnel”, in relation to a
company, means—
(i) the Chief Executive Officer or the
managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer; and
(v) such other officer as may be prescribed;
 Appointment of Directors

1. By Promoters i.e. First directors of the

company
2.By Members/ share holders of the
company at GM
3.By small shareholders
4.By the Board of directors
5.By third party
 1. By promoters (first directors of
the co.)
• Usually named in company’s articles and are
appointed by promoters in the manner laid down in
AOA

• In case of a One Person Company: (as per 2013 act)

an individual being member shall be deemed to be its
first director until the director or directors are duly
appointed by the member in accordance with the
provisions of the section.
 Appointment of First director
(by Promoter)
Situation
1. Named in company’s articles of
Association
2. If the articles of association are silent
about first director , but articles prescribe
the manner of appointment of directors.
3. If the first director is not named in AOA
and the articles of association not
contain any provision for appointment of
first director,
It applies to all companies whether public or private
Appointment of first director
Usually the first director are named in AOA and
are appointed by promoters in the manner laid
down in AOA.
(till appointment of directors in the 1st AGM)
The first director will be determined in writing by
the subscribers of MOA or majority of them.
However, until first directors are so determined,
all the subscribers who are individuals shall
continue to be deemed as directors.
(till appointment of directors in the 1st AGM)
The subscribers of Memorandum who are
individuals become directors.
If all the subscribers to MOA are body
corporates, the company will have no directors
until the first directors are appointed at annual
general meeting
(till appointment of directors in the 1st AGM)
 By shareholders
• The directors are appointed by the
company in annual general meeting of
shareholders.
• Not less than 2/3rd of total number of
directors of a company, shall be rotational
directors, i.e shall be liable to retire by
rotation and remaining 1/3rd may be non
rotational.
 Appointment of rotational
directors
•Not less than 2/3rd of total number of directors shall be liable to retire by rotation.
•Total number of directors means the number of directors for the time being appointed a
directors and not the number fixed by AoA
•The directors to retire by rotation at every annual general meeting shall be those who have
been longest in office since their last appointment, but as between persons who became
directors on the same day, those who are to retire shall, in default of and subject to any
agreement among themselves, be determined by lot.

( At the annual general meeting at which a director retires as aforesaid, the company may
fill up the vacancy by appointing the retiring director or some other person thereto.)

For the purposes of this sub-section, “total number of directors” shall not include
independent directors, whether appointed under this Act or any other law for the time
being in force, on the Board of a company.
 Procedure for appointment in
AGM
• Directors are appointed by passing a
Ordinary resolution in General meeting.
• Separate resolution for appointment of
each directors is to be moved.
( 2 or more directors appointed by passing a single resolution is not a valid appointment)

• Option to adopt principle of proportional representation for

appointment of directors
Notwithstanding anything contained in this Act, the articles of a
company may provide for the appointment of not less than two-
thirds of the total number of the directors of a company in
accordance with the principle of proportional representation
Appointment of small shareholders directors

Meaning of small shareholder:

- A shareholder holding shares of nominal value of not more than twenty
thousand rupees or such other sum as may be prescribed.
– He may be a holder of equity shares or preference shares of both
Provision:
A listed company may have one director elected by such small
shareholders in such manner and with such terms and conditions as
may be prescribed.
 Important provisions regarding
small shareholder directors
• Applicable to listed companies only
• Appointment of small shareholder is optional or obligatory
Note- If notice is served by the small shareholders shareholders for the appointment of such
director, then it is obligatory or legally compulsory
• Requirement of notice by small shareholders
– Notice must be in writing
– Shall be given at least 14 days before the meeting
– Notice shall be given by at least 1/10th in number of small share holders
– The notice shall be signed by at least 1000 small shareholders
– The notice shall specify name, address, number of shares held , particulars of
shares with differential rights and folio number of
a) Shareholders proposing the resolution and
b) The person whose name is proposed as a “small shareholder’s Director”
• Only a small shareholder can be appointed as small shareholders directors.
• Small shareholders director shall be appointed in such manner and with such terms
and conditions as may be prescribed
• Disqualification of small shareholders directors are same as of any other
director
• He shall vacate the office if he ceases to be a small shareholder
• Small shareholder director shall be appointed for a maximum period of
three years
• He shall not retire by rotation
• He may be re- elected for another period of three years
• A person cannot be a small shareholder’s director in more than 2
companies
 Appointment By Board of Directors
i) Additional director
- Within the maximum strength of board fixed by articles, board may appoint such director if
authorised by Articles of association by passing a resolution at the Board Meeting
- Position of additional director- same rights, provisions, duties, liabilities as any other director
- director will vacate the office as an additional director at any time who shall hold office up to the
date of the next annual general meeting or the last date on which the annual general
meeting should have been held, whichever is earlier.
- No Central Govt. approval is required to appoint Additional director
- In case number of directors fall below legal minimum, appointment of additional director by
remaining directors will be valid
- Legal provisions related to appointment of additional directors is applicable to all
companies( Public and private)

Total number of directors additional and others must not exceed maximum
number of directors fixed by AoA
A person fails to get appointed as director in AGM cannot be appointed by board
as an additional director
(ii) Casual vacancy (other than retirement of director)
Meaning -In the case of a public company, if the office of any director appointed by the
company in general meeting is vacated before his term of office expires in the normal
course,the resulting casual vacancy
 It arises as a result of death, resignation, disqualification or any reason other
than retirement by rotation.
 If Articles contains provision for filling casual vacancy, casual vacancy is filled in
accordance with the regulations and provisions prescribed in AoA
 If articles of company does not contain any provision related to filling of casual
vacancy then it may be filled by Board of Directors at a board meeting by passing a
resolution at the board meeting
 Provided that any person so appointed shall hold office only up to the date up to
which the director in whose place he is appointed would have held office if it had not
been vacated.
(iii) Alternate Director
The Board of Directors of a company may, if so authorised by its articles or by a
resolution passed by the company in general meeting, appoint a person, not being a
person holding any alternate directorship for any other director in the company, to act
as an alternate director for a director during his absence for a period of not less than
three months from India:

• No person shall be appointed as an alternate director for an independent director

unless he is qualified to be appointed as an independent director under the
provisions of this Act
• An alternate director shall not hold office for a period longer than that permissible to
the director in whose place he has been appointed and shall vacate the office if and
when the director in whose place he has been appointed returns to India
• An alternate director is excluded for the purposes of counting number of directorship
which a person can hold.
 Appointment of Nominee
Director
Subject to the articles of a company, the Board may appoint any person as a
director nominated by
•any institution in pursuance of the provisions of any law for the time being
in force or of any agreement or
• by the Central Government or the State Government by virtue of its
shareholding in a Government company.
 Appointment by Third parties/ Appointment of
Nominee Directors
Third parties meaning –’debenture holders, financial or
banking companies or financial corporations who have
advanced loans to the company.
•Director so appointed is known as nominee director
•Nominee directors are watchdogs of third parties to
safeguard their fund in the assisted company.
 Appointment by Third parties
• Nominee directors representing financial institutions
other than constituted under special act-
– Nomine director can be appointed by financial company if authorized by
articles of assisted company

– their number cannot exceed by 1/3rd of the total no. of directors, also
appointment should be within maximum number of directors specified in
company’s articles

– All the provision of companies act will be applicable to nominee director,

also liable to retire by rotation
 Appointment by Third parties
• Nominee director representing financial institutions constituted
under special act
– Not retire by rotation
– Not required to hold qualification shares
– In reckoning two- third or any proportion thereof, shall not be taken into account
– Not counted for total number of directors
– Can be appointed even if there is no provision in the assisted company’s article
– Can be appointed even if his appointment will result in increasing the number of
directors beyond maximum number of directors
– Can be removed only by the authority appointing him

Their appointment are governed by special act which override the

provisions of the companies act 2013
 Appointment by tribunal
• Tribunal has power to appoint a nominee director on the
board of directors where the company’s affair are
conducted in manner prejudicial or oppressive to
company’s member / public interest/ company’s interest.
• Applicable to all companies i.e. public and private.
 Appointment of Independent
Director
An independent director may be selected from a data bank containing names, addresses
and qualifications of persons who are eligible and willing to act as independent
directors, maintained by any body, institute or association, as may by notified by the
Central Government, having expertise in creation and maintenance of such data bank
(i) responsibility of exercising due diligence before selecting a person from the data
bank referred to above, as an independent director shall lie with the company making
such appointment.
(ii) The appointment of independent director shall be approved by the company in
general meeting
(iii) The Central Government may prescribe the manner and procedure of selection of
independent directors who fulfill the qualifications and requirements
(iv) The company and independent directors shall abide by the provisions specified in
Schedule IV Companies act 2013( Sec 149(8))

Source http://www.mca.gov.in/SearchableActs/Section150.htm
 Legal provisions related to
appointment of directors
1. Director Identification Number
Every person proposed to be appointed as a director by the company in general meeting or otherwise,
shall furnish his Director Identification Number and a declaration that he is not disqualified to
become a director under this Act.
•No person shall be appointed as a director of a company unless he has been allotted the Director
Identification Number
•No individual, who has already been allotted a Director Identification Number under section 154,
shall apply for, obtain or possess another Director Identification Number.
•Every existing director shall, within one month of the receipt of Director Identification Number from
the Central Government, intimate his Director Identification Number to the company or all companies
wherein he is a director.
•Every company shall, within fifteen days of the receipt of intimation under section 156, furnish the
Director Identification Number of all its directors to the Registrar or any other officer or authority as
may be specified by the Central Government

Source http://www.mca.gov.in/SearchableActs/Section152.htm
http://www.mca.gov.in/SearchableActs/Section156.htm
Obligation to indicate Director Identification Number
Every person or company, while furnishing any return, information or particulars as are
required to be furnished under this Act, shall mention the Director Identification Number in
such return, information or particulars in case such return, information or particulars relate to
the director or contain any reference of any director

Punishment for contravention

If any individual or director of a company, contravenes any of the provisions of section 152,
section 155 and section 156, such individual or director of the company shall be punishable
• with imprisonment for a term which may extend to six months or
• with fine which may extend to fifty thousand rupees and where the contravention is a
continuing one, with
•a further fine which may extend to five hundred rupees for every day after the first during
which the contravention continues.(Note in text book fine is mentioned to be Rs. 5000 per
day which is incorrect as per section 159 its Rs. 500 every day)

Source http://www.mca.gov.in/SearchableActs/Section159.htm
 Legal provisions related to
appointment of directors
2. Consent of directors to act as Directors

•A person appointed as a director shall not act as a director unless he gives his consent
to hold the office as director
•Such consent has been filed with the Registrar within thirty days of his appointment in
such manner as may be prescribed:
 Legal provisions related to
appointment of directors
3. Separate resolution for each appointment

•Two or more persons can not be appointed as director by passing single

resolution

Exception to above rule-

•At a general meeting of a company, a proposal for the appointment of two or
more persons as directors of the company by a single resolution has first been
agreed to at the meeting without any vote being cast against it.
•In such a case 2 or more directors can be appointed by single resolution
 Legal provisions related to
appointment of directors
4. Appointment by Proportional representation

- As per articles, appointment of not less than 2/3rds of the total

number of directors as a public company/private company
subsidiary of public company.
-by a single transferable vote or cumulative voting or any other
method
- appointment made once in 3 years.
- Not applicable to a wholly owned govt. companies

Suggested reading - https://www.corporate-cases.com/2012/07/proportional-representation-appointment-director.html

 Legal provisions related to
appointment of directors
5.Share Qualifications of Directors
•Share qualification means the share which a director is required to hold in company to
enable himself to be the director of company.
•Articles of association provide for the share qualification
•Companies act 2013 does not impose any share qualification, however companies
act 1956, specified share qualification i.e qualifications shares must not exceed of
nominal value of Rs. 5000.
 Qualification of Directors
• No direct provision under companies act.
• No prescribed academic or professional
qualification for directors
• Their qualification can be summed up as:
– A director must be an individual
– A director must not suffer from any
disqualification of directors ( discussed in next slide)
Disqualifications for appointment of
director
  A person shall not be eligible for appointment as a director of a company, if —
(1) he is of unsound mind and stands so declared by a competent court;
(2) he is an undischarged insolvent;
(3) he has applied to be adjudicated as an insolvent and his application is pending;
(4) he has been convicted by a court of any offence, whether involving moral turpitude or
otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a
period of five years has not elapsed from the date of expiry of the sentence :Provided that if a person
has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of
seven years or more, he shall not be
eligible to be appointed as a director in any company;
(5) an order disqualifying him for appointment as a director has been passed by a court or
Tribunal and the order is in force;
(6) he has not paid any calls in respect of any shares of the company held by him, whether alone or
jointly with others, and six months have elapsed from the last day fixed for the payment of the call;
(7) he has been convicted of the offence dealing with related party transactions under section 188
at any time during the last preceding five years; o
 Disqualifications for appointment of director

8.No person who is or has been a director of a company which—

•(a) has not filed financial statements or annual returns for any continuous
period of three financial years; or
•(b) has failed to repay the deposits accepted by it or pay interest thereon or
to redeem any debentures on the due date or pay interest due thereon or pay
any dividend declared and such failure to pay or redeem continues for one year
or more, shall not be eligible to be re-appointed as a director of that company
or appointed in other company for a period of five years from the date on which
the said company fails to do so.
 Disqualifications for appointment of director
 A private company which is not subsidiary of public company may by its
articles provide for any disqualifications for appointment as a director in
addition to those specified
 Public companies can not provide for any additional disqualifications
 Removal of directors
A company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal,
before the expiry of the period of his office after giving him a reasonable opportunity of being heard .
Procedure for removal
(1) A special notice shall be required of any resolution, to remove a director under this section, or to
appoint somebody in place of a director so removed, at the meeting at which he is removed. Notice shall
be served 14 days before the meeting
•On receipt of notice of a resolution to remove a director under this section, the company shall send a
copy thereof to the director concerned, and the director, shall be entitled to make a representation
against the resolution and to be heard at the meeting.
•Where notice has been given of a resolution to remove a director and the director concerned makes
with respect thereto representation in writing to the company and requests its notification to members of
the company, the company shall, if the time permits it to do so, send a copy of the representation to
every member of the company to whom notice of the meeting is sent (whether before or after receipt of
the representation by the company),
•and if a copy of the representation is not sent as aforesaid due to insufficient time or for the company’s
default, the director may without prejudice to his right to be heard orally require that the representation
shall be read out at the meeting
•The general meeting will be held and concerned director will be given opportunity to heard . If the
resolution for removal is passed by ordinary resolution, the director shall be removed
 Removal of directors
Filling of vacancy caused by Removal
A vacancy created by the removal of a director under this section may, if he had been appointed
by the company in general meeting or by the Board, be filled by the appointment of another director in
his place at the meeting at which he is removed, provided special notice of the intended appointment
has been given together with the notice of approval
. A director so appointed shall hold office till the date up to which his predecessor would have held
office if he had not been removed.
If the vacancy is not filled at the same meeting, it may be filled by directors as a casual vacancy in
accordance .Provided that the director who was removed from office shall not be re-appointed as a
director by the Board of Directors.
.
 Removal of directors
Circumstances in which director can not be removed-
a) Where the director is appointed by the system of proportional representation
b) Where the director has been appointed by tribunal
 Removal of directors
Removal by tribunal –
In case of oppression and mismanagement, sometimes the application is
made to Tribunal, and if the tribunal is satisfied that the relief should be
granted, it may terminate any agreement of the company with directors and
may remove any manager, managing director or any director of the
company.
The person so terminated by tribunal can not serve the company in same
capacity for a period of 5 years
Resignation of director
A director may resign from his office by giving a notice in writing to the company before
the expiry of his term.
(1)Resignation by notice to company
a) the Board shall on receipt of such notice take note of the same and
b) the company shall intimate the Registrar in such manner, within such time and in
such form as may be prescribed and
c) The company shall also place the fact of such resignation in the report of
directors laid in the immediately following general meeting by the company
 Resignation of director
2) The director shall also forward a copy of his resignation along with detailed reasons
for the resignation to the Registrar within thirty days of resignation in such manner as
may be prescribed
3) The resignation of a director shall take effect from the date on which the notice is
received by the company or the date, if any, specified by the director in the notice,
whichever is later
4) The director who has resigned shall be liable even after his resignation for the
offences which occurred during his tenure

Where all the directors of a company resign from their offices, or vacate their offices under
section 167, the promoter or, in his absence, the Central Government shall appoint the
required number of directors who shall hold office till the directors are appointed by the
company in general meeting.
 Position of Directors
1. Directors as agents
2. Directors as managing partners
3. Directors as trustees

NOTE : Directors are trustees for the company and not any third parties
.
Director as Quasi-trustee
Reason :
- they are not vested with the ownership of company’s property
- functions are not same of trustees
- duties of care are not so onerous as those of trustees

Note – Directors are officers of the company [sec 2)30)]), Director treated as officers of an company.  They
are liable to certain penalties if the provisions of the companies act are not strictly complied with.
http://taxguru.in/company-law/roles-responsibilities-directors-companies-act-2013.html#sthash.rkSpVuGP.dpuf
Powers of Directors

(i) General Powers :

- entitled to exercise all such powers
and acts as the company is authorised to
do. (co-extensive right)
- exercise such powers subject to rules
in Articles/MoA/ general meeting
- can not exercise any power which are
required is to be exercised by shareholders in
general meeting.
Powers of Directors
(ii) Specific Powers /Powers at Board meeting :
perform powers on behalf of company by means of resolutions passed at the meetings
- make calls on shareholders
- issue securities including debentures
- borrow moneys other than debentures
- invests the funds of company
- power to grant loans or give guarantee or provide security
-Approve financial statements and board’s reports
-Diversify the business of company
-approve amalgamation, merger etc
-Take over, acquire a controlling or substantial stake in another company
-Power on any other matter as may be prescribed
 Duties of Directors
 Subject to the provisions of this Act, a director of a company shall act in accordance
with the articles of the company.
Other duties
1. Duty to act in good faith
2. Duty of due and reasonable care
3. Duty not to involve in conflict of interest
4. Duty not to obtain gain or advantage
5. Duty not to assign his office- any assignment so made is void

If a director of the company contravenes the provisions of this section such director shall be punishable with fine which
shall not be less than one lakh rupees but which may extend to five lakh rupees.
 Remuneration of Directors
The total managerial remuneration payable by a public company , to its directors, including managing
director and whole-time director , and its manager in respect of any financial year shall not exceed
eleven per cent. of the net profits of that company for that financial year computed in the manner laid
down in section 198 except that the remuneration of the directors shall not be deducted from the gross
profits