CENTRAL UNIVERSITY OF SOUTH BIHAR

CORPORATE GOVERNANCE
Research Topic: - ‘Directors: Resident, Independent and Nominee
Director.
SUBMITTED TO:
Dr. Pradeep Kumar Das
BY:

NAME OF STUDENT : RAJNISH KUMAR SINGH

PROGRAMME : B.A.LL.B (HONS.)

SEMESTER: 9th
ENROL. NO. : CUSB1513125034
CENTRAL UNIVETSITY OF SOUTH BIHAR

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ACKNOWLEDGEMENT
I am very grateful to my teacher who gave me very important and interesting project work. My
project work is on 'Directors: Resident, independent and Nominee Director'. I started and did this
project work under the supervision and guidelines of Dr. Pradeep Kumar Das Without his
suggestions and guidelines it would have been very difficult to complete the task within prescribed
period of time.
He suggested me the topic of project and the steps that should be followed while making the
project. The other very important is that he suggested me the object of making research work.
So I acknowledged him for this gratuitous work who provided time and help from his busy
schedule. At the same time I acknowledge to my family members who provided me various kind
of helps in kinds of time as well various type of resources to complete the project.
I am also thankful to library staffs who provided me books when required to me to complete the
research work.
Other thing from which I came to know the practical approaches is that he gave opportunity to sit
in the various class.

Thanks

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RajnishKumar Singh

ABSTRACT
A company is an artificial person and it has no physical existence. It cannot act in its own person.
It can work only through some human agency, they are known as Directors. The person who are
in charge of the management of the affairs of the management of the affairs of a company are
called as Directors. They are collectively known as Board of Directors or the Board. So a
Director may define as a person having control over management, direction, conduct and
superintendence of the affairs of a company. The supreme executive authority controlling the
management and affairs of a company vests in the team of directors of the company, collectively
known as its Board of Directors. At the core of the corporate governance practice is the Board of
Directors which oversees how the management serves and protects the long term interests of all
the stakeholders of the Company. The institution of board of directors was based on the premise
that a group of trustworthy and respectable people should look after the interests of the large
number of shareholders who are not directly involved in the management of the company. A
company, though a legal entity in the eyes of law, is an artificial person, existing only in
contemplation of law. It has no physical existence. It has neither soul nor body of its own. As
such, it cannot act in its own person. It can do so only through some human agency. The
persons who are in charge of the management of the affairs of a company are termed as
directors. They are collectively known as Board of Directors or the Board. The directors are the
brain of a company.

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TABLE OF CONTENTS

SR. TITLE PAGE

NO. NO.

1 Acknowledgement 2

2 Abstract 3

3 Research Title 5

4 Research Questions 6

5 Hypothesis 6

6 Table of Cases 7

7 Introduction 8

8 Board of Director 9

9 Role and importance of Board in Corporate 10

Governance

10 Types of Director 11-16

11 Resignation of Director 17

12 Removable of Director 18

13 Conclusion 19

14 Bibliography 20

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RESEARCH TITLE
An Analysis of: Directors: Resident, independent and nominee Director.

RESEARCH METHODOLOGY
This Research Work is basically based upon Doctrinal Method of research, basing upon the
research through Primary sources including contemporary literature review, Books, Journals,
Digests and Secondary Sources including websites, online articles and the data collected from
World Wide Web.

Method of Writing
The research paper is in theoretical in nature.

Mode of Citation
The mode of citation used in this paper is 19th edition of Harvard Blue Book Citation.

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RESEARCH QUESTIONS
The research questions whose answers are sought to be found via this research project are as
follows-

1. What is Director?

2. What are power and function of Directors in Corporate Governance?

3. Who is entitled to appoint as a Director?

4. Types of Directors in Corporate Governance?

HYPOTHESIS
The following hypotheses would be taken account of in this study and they have been examined
in the course of discussion. A conclusion has been drawn to assess whether the hypotheses
proposed were true to their extent of statement:-

1. That the Director manage the all affairs of the Company.

2. That the it play important role in Corporate Governance.

3. That there are many types of Director.

4. Director is the Brain and only brain of the company.

5. Director may also be remove for his misconduct.

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TABLE OF CASES
1. Kirlampudi Sugar Mills Ltd. V. G. Venkata Rao (2003) 42 SCL 798 (AP).
2. Vineet Kumar Mathur v. Union of India (1996) 20 CLA 213 (SC).
3. Balasaraswathi Ltd v. A. Parameswara Aiyer (1956) 26 Comp. Cas. 298
(Mad.).
4. R.R. Kothandaraman v. CIT (1957).
5. Lee Behrens and Co., 588.
6. Dale and Carrington Investment (P.) Ltd. V. P.K. Prathapan (2004) 54
SCL 601 (SC).
7. Sawapan Das Gupta V. Navin Chand Suchanti (1988) 3 Comp. LJ 76
(Cal).
8. Forest of Dean Coal Mining Co., In re (1878) 10 Ch.D. 450.
9. B.R. Kundra v. Motion Pictures Association (1976) 46 Comp. cas. 339.
10.S. Labh Singh V. Panaser Mech. Works (P.) Ltd (1987) 61 Comp. Cas.
618.
11.Benefit and Deposit Society Ltd v. Bharat Kumar K. Shah (2001) 30 SCL
246 (Mad.)
12.Ravi Prakash Singh v. Venus Sugar Ltd. (2008)84 SCL 75.
13.Queen Kuries and Loan (P.) Ltd. V. Sheena Jose (1993) 76 Comp. Cas.
821 (ker.)

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INTRODUCTION
The supreme executive authority controlling the management and affairs of a company vests in
the team of directors of the company, collectively known as its Board of Directors. At the core of
the corporate governance practice is the Board of Directors which oversees how the management
serves and protects the long term interests of all the stakeholders of the Company. The institution
of board of directors was based on the premise that a group of trustworthy and respectable people
should look after the interests of the large number of shareholders who are not directly involved
in the management of the company. The position of board of directors is that of trust as the board
is entrusted with the responsibility to act in the best interests of the company. According to section
2(34) of the Companies Act 2013, defines the term Director appointed to a company. Director include any
person occupying the position of director by whatever name called1. It does not matter by what name is
call2. If he performs the functions of Director, he would be called as Director in the eye of law3. Although
the Board comprises individual directors, yet the actions and deeds of directors individually functioning
cannot bind the company, unless a particular director has been specifically authorized by a Board
resolution to discharge certain responsibilities on behalf of the company. The Board of Director are the
brain and only brain of the company which is the body and company can act only through them.
A company is an artificial person and it has no physical existence. It cannot act in its own person.
It can work only through some human agency, they are known as Directors. The person who are
in charge of the management of the affairs of the management of the affairs of a company are
called as Directors. They are collectively known as Board of Directors or the Board. So a
Director may define as a person having control over management, direction, conduct and
superintendence of the affairs of a company.

1
. Forest of Dean Coal Mining Co., In re (1878) 10 Ch.D 450
2
.Ramaswamy Iyer V. Brahmayya and Co. (1996).
3
. A Ramaiya Guide to the Companies Act, 12th Edition, Page 1215.

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Board of Directors.
A company, though a legal entity in the eyes of law, is an artificial person, existing only in
contemplation of law. It has no physical existence. It has neither soul nor body of its own. As
such, it cannot act in its own person. It can do so only through some human agency. The
persons who are in charge of the management of the affairs of a company are termed as
directors. They are collectively known as Board of Directors or the Board. The directors are the
brain of a company. They occupy a pivotal position in the structure of the company. Directors
take the decision regarding the management of a company collectively in their meetings known
as Board Meetings or at the meetings of their committees constituted for certain specific
purposes4. Section 2 (10) of the Companies Act, 2013 defined that “Board of Directors” or
“Board”, in relation to a company, means the collective body of the directors of the company.

Minimum/Maximum Number of Directors in a Company-

Section 149(1) Section 149(1) of the Companies Act, 2013 requires that every company shall
have a minimum number of 3 directors in the case of a public company, two directors in the
case of a private company, and one director in the case of a One Person Company. A company
can appoint maximum 15 fifteen directors5. A company may appoint more than fifteen
directors after passing a special resolution in general meeting and approval of Central
Government is not required. A period of one year has been provided to enable the companies
to comply with this requirement.

Number of directorships-
Section 165 Maximum number of directorships, including any alternate directorship a person
can hold is 20. It has come with a rider that number of directorships in public companies/
private companies that are either holding or subsidiary company of a public company shall be
limited to 10. Further the members of a company may restrict abovementioned limit by passing
a special resolution. Any person holding office as director in more than 20 or 10 companies as
the case may be before the commencement of this Act shall, within a period of one year from
such commencement, have to choose companies where he wishes to continue/resign as
director. There after he shall intimate about his choice to concerned companies as well as
concerned Registrar. Such person shall not act as director in more than the specified number of
companies after dispatching the resignation or after the expiry of one year from the
commencement of this Act, whichever is earlier. If a person accepts an appointment as a
director in contravention of above mentioned provisions, he shall be punishable with fine which

4
. Vineet Kumar Mathur V. Union of India (1996) 20 CLA 213 (SC).

5
. Swapan Das Gupta V. Navin Chand Suchanti (1988)3 Comp. LJ 76 (Cal.).

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shall not be less than Rs.5000 but which may extend to Rs. 25,000 for every day after the first
day during which the contravention continues.

The Role and Importance of Board in Corporate Structure-

The Board of Directors play a vital role in ensuring good governance, importance of the Board is
immeasurable for ensuring appropriate directions with regard to leadership, vision, strategy,
policies, monitoring, supervision and accountability to shareholders and stakeholder. Director
may play the role of an officer of company and at the same time a managing partner of the
company.

However following are important role of Board in Corporate Governance are:-

(1) To establish an origination vision and mission.

(2) Giving strategic direction and advice Board.
(3) Overseeing strategy implementation and performance.
(4) Developing and Evaluating the CEO.
(5) To ensure that the organization has sufficient appropriate human resource.
(6) To ensure effective stakeholder relation.
(7) Risk mitigation.
(8) Procuring resources.

Duties of directors- Section 166

For the first time, duties of directors have been defined in the Act. A director of a company shall:
—

(1) Act in accordance with the articles of the company.

(2) Act in good faith in order to promote the objects of the company for the benefit of its
members as a whole, and in the best interests of the company, its employees, the
shareholders, and the community and for the protection of environment.6
(3) Exercise his duties with due and reasonable care, skill and diligence and shall exercise
independent judgment.7
(4) Not involve in a situation in which he may have a direct or indirect interest that conflicts,
or possibly may conflict, with the interest of the company.

6
. Mrs. Kiran Mazumdar Shaw, In re (2017) 77 Taxmann.com 95 (NCLT).
7
. Mrs. Sandhya Varma V. Union Of India (2017) 78 taxmann.com 344 (Mad.).

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 (5) Not achieve or attempt to achieve any undue gain or advantage either to himself or to his
relatives, partners, or associates and if such director is found guilty of making any undue
gain, he shall be liable to pay an amount equal to that gain to the company.
(6) Not assign his office and any assignment so made shall be void.

Types of Directors

Following are the main types of Director:-

(1) Resident Director.

(2) Independent Director.
(3) Nominee Director.

(1) Resident Director:- Section 143(3) of the Company Act has provided for resident
director in India as compulsory shall have at least one director who has stated in
India for a total period of not less than 182 days in the previous calendar year. It is
clarified that the residency requirement' would be reckoned from the date of
commencement of section 14i of the Act i.e. 1$ April, 2014, Tine first, previous
calendar year, for compliance with these provisions would, therefore, be Calendar
year 2014. The period to be taken into account for compliance with these provisions
will be the remaining period of calendar year 2014 li.e. lst April to 31"1 December).
Therefore, on a proportionate basis, the number of davs for which the director(s)
would need to be resident in India. During Calendar year.2014, shall exceed 136
days. Regarding newly incorporated companies it is caddied that companies
incorporated between 1.4.2014 to 3O.9.2O14 should have a resident director either at
the incorporation stage itself or within six months of their incorporation. Companies
incorporated artery 30.9.2014 need to have the resident director from the date of
incorporation itself.

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 (2) Independent Director: - Section 2(47) of the Act prescribed that “Independent
director” means an independent director referred to in sub section (5) of section 149
of the Act. In fact reference should have been made to sub section (6) of 149 as it
specified the qualifications of independent director with clarity. Every listed public
company shall have at least one-third of the total number of directors as independent
directors (fraction is to be rounded off to one).8 Central Government has prescribed
under Rule 4, public companies with specified limits as on the last date of latest
audited financial statements mentioned below shall also have at least 2 directors as
independent directors: - paid up share capital of Rs. 10 crore or more; or turnover of
Rs. 100 crore or more; or in aggregate, outstanding loans/borrowings/ debentures/
deposits/ exceeding Rs. 50 crore or more.9 In case a company covered under this rule
is required appoint higher number of independents directors due to composition of its
audit committee and then they shall appoint such higher number of independent
directors.

Definition of an Independent Director –

Section 149 (6) an independent director means a director other than a managing director or a
whole-time director or a nominee director who does not have any material or pecuniary
relationship with the company/ directors. Section 149(6) of the Act prescribes the criteria for
independent directors which are as follows:

(a) Who in the opinion of the Board, is a person of integrity and possesses relevant industrial
expertise and experience;

(b) Such individual shall not be a promoter or related to promoter of the company or its holding,
subsidiary or associate company;

(c) Such individuals must not have any material or pecuniary relationship during the two
immediately preceding financial years or during the current financial year with the company or
its promoters/directors/holding/subsidiary/ associate company.

(d) The relatives of such person should not have had any pecuniary relationship with the
company or its subsidiaries, amounting to 2% or more of its gross turnover or total income or Rs.
50 lacs or such higher amount as may be prescribed, whichever is less, during the two
immediately preceding financial years or in the current financial year;

(e) He must not either directly or any of his relatives (i) hold or has held the position of a key
managerial personnel or is or has been employee of the company or its holding, subsidiary or
associate company in any of the three financial years immediately preceding the financial year in

8
. The Companies (Appointed and Qualifications of Directors) Second Amendment Rules.
9
. Vide Companies (Amendment) Act, 2017.

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which he is proposed to be appointed. (ii) is or has been an employee or proprietor or a partner,
be appointed, of— (A) a firm of auditors or company secretaries in practice or cost auditors of
the company or its holding, subsidiary or associate company; or (B) any legal or a consulting
firm that has or had any transaction in any of the three financial years immediately preceding the
financial year in which he is proposed to with the company, its holding, subsidiary or associate
company amounting to ten per cent. or more of the gross turnover of such firm; (iii) holds
together with his relatives two per cent or more of the total voting power of the company; or (iv)
is a Chief Executive or director, by whatever name called, of any non-profit organization that
receives 25% or more of its receipts from the company, any of its promoters, directors or its
holding, subsidiary or associate company or that holds 2% or more of the total voting power of
the company, then also he is not eligible for office of independent director; or

(f) who possesses such other qualifications as prescribed in Rule 5 as an independent director
shall possess appropriate skills, experience and knowledge in one or more fields of finance, law,
management, sales, marketing, administration, research, corporate governance, technical
operations or other disciplines related to the company’s business.

Appointment of an Independent Director-

Section 149(10) Subject to the provisions of Section 152, an independent director can be
appointed for a term of up to five consecutive years on the Board.10 However, in case of his
reappointment for further five year then special resolution passed in general meeting and
disclosure of such appointment is made in the Board’s report shall be required. {Section 149
(10)} Further independent director can be considered for re-appointment after expiration of three
years of ceasing to become an independent director but he must not be appointed/associated with
the company directly or indirectly in any other capacity during the said period of three years.11
Any tenure of an independent director on the date of commencement of this Act is not
considered for the above term. {Section 149 (11)} The provisions of retirement of directors by
rotation are not applicable on Independent director. {Section 149 (13)} Further, in case of
independent directors, the explanatory statement relating to their appointment should contain a
declaration from the Board that in their opinion, the independent directors satisfy the conditions
provided in the Act for such appointment. {Proviso to Section 152 (5)}.

(3) Nominee Directors: -

A Nominee Director stand apart from his fellow directors by virtue of having been
nominated by a stakeholder of a company to represent the stake holder interest. A
nominee director is an individual nominated by an institution, including banks and

10
.Thakur Paper Mills Ltd. In re 1875 Tax LR 1656 (pat.).
11
. Oriental Metal Pressing V. Bhashker Kashinath Thakoor (1961).

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 financial institutions, on the board of companies where such institutions have some
‘interest’. The ‘interest’ can either be in form of financial assistance such as loans or
investment into shares. Such strategic investment may have a direct bearing on the
profitability of a nominator and therefore appointment of nominee director becomes
essential to facilitate monitoring of operations and business of the investee company.
The main purpose of appointment of such persons is to safeguard the interest of the
nominator, without conflicting with his/ her fiduciary duty as a director. Such director
plays several roles and responsibilities, including adequate disclosure of interest,
reporting to the nominator and protection of the interest of company in its entirety. In
case of holding the position in specialized entities, the person must act in accordance
with the operations of such entities, guided by industry specific statutory provisions in
addition to the general roles and responsibilities. Under Companies Act, 2013, the
appointment of a nominee director is made in accordance with section 161(3): “(3)
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.” Conventionally,
a nominee director is “nominated” by a nominator. The nominator has all the rights
with respect to appointment, removal, resignation or cessation and the terms and
conditions of appointment form part of a long term agreement or a shareholders’
agreement entered into with the investee company. Since a nominee director is
generally appointed by the nominator at its own terms, his office is liable to retire by
rotation, unless otherwise provided in the shareholder’s agreement.

Purpose of appointment of a nominee directors

Safeguard the interests of the nominator---

The primary purpose of appointment of a nominee director is to represent the interest
of the nominator and so far as necessary, to safeguard the interest of the nominator
unless it conflicts with the interest of the company as a whole. Such director plays the
role of a ‘watch dog’ for the nominator, monitoring the activities, operations and
developments in the investee company, which is otherwise not feasible for the
nominator to ensure.12
Balance in the Board of Directors
One of the most important factors in ensuring effective functioning of a Board of
Directors is ‘diversity’.13 Diversity in board can be achieved by having an adequate
mix of executive, nonexecutive directors, independent directors, woman directors and

12
. Sandhya Varma V. Union of India. (2017) 78 taxmann.com 344 (Mad.).

13
.Kiran Mazumdar Shaw, In re (2017) 77 taxmann.com 95 (NCLT-Bang).

14
 directors having specialized knowledge. A nominee director is not merely a thread to
protect the interests of nominator, but s/he is also capable of giving meaningful insights
towards better corporate governance practices and functioning of the company. His/
her specialized knowledge in the field of finance and banking is a utility for the investee
company, which can be deployed in taking critical policy and business decisions,
benefitting the company as a whole.

Role of nominee director

General roles and responsibilities

• Represent and safeguard the interest of the nominator by making correct suggestions before the
Board of the investee company and ensure that the suggestions are considered while taking
decisions, at all times during the tenure of his appointment.14

• Act as a ‘watchdog’ and oversee the operations of the investee company. He must make his
presence felt by placing expertise at the disposal of the Board of the investee company.

• Play a vital role in policy making of the investee companies by engaging into dialogue with
other members of the Board of the investee company and members of Board of Directors and
should take active part in development of investee company’s vision, mission and values.

• Act as liaison between the investee company and the nominator.

• A nominee director is a non-executive director, however, he must be actively involved in

decisions pertaining to financial performance of the investee company, its fund-raising plans
including debt-raising, investments, etc.15

• Actively participate in such meetings, which have a bearing on the interests of the nominator.

• Must not abstain from voting on resolutions considered at the meetings of the Board of the
investee company, involving the nominator, unless involving any personal interest of the
nominee director.

• Suggest good corporate governance practices for working of the management of the investee
company, in proper consultation with the nominator.

• Make adequate disclosures in accordance with section 184 of the Companies Act, 2013.

• In addition to the requirement of disclosure under section 184 of the Companies Act, 2013, the
nominee director must disclose to the nominator, any personal interest in the investee company,

14
.Venkatachalapati V. Guntur Mills AIR 1929 Mad. 353.
15
. Personal Performance Consultants India (P.) Ltd., In re (2016) 75 taxmann.com 299 (NCLT-Bang).

15
which is conflicting/ is likely to conflict his fiduciary duties as the director and as a nominee of
the nominator, before assuming office as a nominee director and as and when there is a change in
the same.

• Make periodical reporting as outlined to the nominator.

• All other duties and responsibilities as per section 166 of the Companies Act, 2013.

• Must cooperate during relinquishment of his office as a nominee director.

• If the nominee director becomes aware of significant information at a board meeting, for
example, he or she may not necessarily be able to immediately share this information with the
nominator. However, as soon as the information becomes public, the same must be immediately
shared with the nominator.

• In addition to the above, a nominee director must exercise adequate care and caution while
dealing with unpublished price sensitive information, in case of listed entity, having to come to
know the same or being in a position where it is likely to be known or aware of such information.
The nominee director shall at all times abide by the Code of Conduct to Regulate, Monitor and
Report trading by Insiders framed by the listed entity.

• He should keep himself updated of any latest policy developments and changes in law, which
may have a direct or indirect bearing on the working of the Investee Company and/ or discharge
of his duties as a nominee director.

• He must ensure that every policy decision taken by the investee company is on sound
commercial lines and based on adequate commercial rationale and safeguards.

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Resignation of director
Section 168 & Rule 15, 16 A director may resign from his office by giving notice in writing.
The Board shall, on receipt of such notice within 30 days intimate the Registrar in Form DIR-12
and also place the fact of such resignation in the Directors’ Report of subsequent general meeting
of the company and post the information on its website. The director shall also forward a copy of
resignation along with detailed reasons for the resignation to the Registrar in Form DIR-11
within 30 days from the date of resignation.16 The notice shall become effective 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. Provided that the director who has resigned shall be liable even after
his resignation for the offences which occurred during his tenure. If all the directors of a
company resign from their office or vacate their office, the promoter or in his absence the
Central Government shall appoint the required number of directors to hold office till the directors
are appointed by the company in General Meeting.

Removal of directors-
Section 169 A company may, remove a director except the director appointed by National
Company Law Tribunal u/s 242, before the expiry of the period of his office after giving him a
reasonable opportunity of being heard after passing the ordinary resolution. Provided that
nothing contained in this sub-section shall apply where the company has availed itself of the
option given to it under section 163 to appoint not less than two thirds of the total number of
directors according to the principle of proportional representation. 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. On receipt of notice of a
resolution to remove a director under this section, the company shall forthwith send a copy
thereof to the director concerned, and the director, whether or not he is a member of the
company, shall be entitled to be heard on the resolution at the meeting. Where notice has been
given of a resolution to remove a director under this section 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,— (a) in any notice
of the resolution given to members of the company, state the fact of the representation having
been made; and (b) 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.17 Provided that copy of the
representation need not be sent out and the representation need not be read out at the meeting if,
on the application either of the company or of any other person who claims to be aggrieved, the

16
. Kamal Kumar Gupta V. Arc Marine (P.) Ltd. (2014) 42 taxmann.com 208 (CLB- Mumbai).
17
. Saumil Dilip Mehta v. State of Maharashtra (2002) 39 SCL 102 (Bom.)

17
Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure
needless publicity for defamatory matter; and the Tribunal may order the company’s costs 24
Appointment and Qualifications of Directors on the application to be paid in whole or in part by
the director notwithstanding that he is not a party to it. 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 under
sub-section (2). 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 under sub-section
(5), it may be filled as a casual vacancy in accordance with the provisions of this Act: Provided
that the director who was removed from office shall not be re-appointed as a director by the
Board of Directors. Nothing in this section shall be taken— (a) as depriving a person removed
under this section of any compensation or damages payable to him in respect of the termination
of his appointment as director as per the terms of contract or terms of his appointment as
director, or of any other appointment terminating with that as director; or (b) as derogating from
any power to remove a director under other provisions of this Act.

18
CONCLUSION
The Board of Directors play a vital role in good governance of the Company. Directors’ act as
guide, coach and mentor to the company. Although the Board comprises individual directors, yet
the actions and deeds of directors individually functioning cannot bind the company, unless a
particular director has been specifically authorized by a Board resolution to discharge certain
responsibilities on behalf of the company. The Board of Director are the brain and only brain of
the company which is the body and company can act only through them. A company is an
artificial person and it has no physical existence. It cannot act in its own person. It can work only
through some human agency, they are known as Directors. The person who are in charge of the
management of the affairs of the management of the affairs of a company are called as Directors.
Director is a crucial person. It is brain and only brain of the company and without it we cannot
run any company. So without a Director a company like a body without brain. It always works
for the success of the company.

19
Bibliography
BOOKS

1. Singh Avatar .Company Law (Lucknow: Eastern Book Company) 2008.

2. Bajpai G.N. The Essential Books of Corporate Governance (New Delhi:Sultan Chand and Sons)
2009.

3. Tripathi S.C. Modern Company Law (Allahabad: Central Law Publications) 2006.

4. Saharay H.K. Company Law (New Delhi: Universal Law Publishing Company Pvt. Ltd) 2008.

5. A.K. Majumdar and G.K. Kapoor, Company Law and Practice, Taxman.

6. Palmer, Palmer’s Company Law, Stevans, London.

WEBSITES

1. http://www.wikipedia.org.

2. http://www.indiankanoon.com.

3. http://www.manupatra.com.

4. http://www.scconline.com.

5. http://www.advocatekhoj.com.

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