Directors A company being an artificial person cannot act by itself.

It has to act through human beings The person through whom the company carries on its business are the Directors Collectively the Directors are called the Board of Directors The Board is the companys executive authority Section 2(13) Director includes any person occupying the position of Director, by whatever name called A director may be defined as the individual who directs ,controls ,manages and superintends the affairs of a company.

As a body they frame the general policy of the company, directs its affairs, appoint companys officers, ensure that they carry out their duties and recommend to the shareholders the distribution of dividend.

Section 235-Only individuals can be directors Minimum Number of Directors- 2 in case of Private Ltd Company and 3 in case of public company

Position of Directors Directors have been described as trustees, agents and managing partners

As agents-The general principles of Law of Agency applies to directors Cairns L.J.observed- Directors are merely agents of a company. The company itself cannot act in its own person ; it can only act through directors and case is as regards those directors merely the ordinary case of principal and agent. Wherever an agent is liable those directors would be liable; where the liability would attach to the principal and principal only ,the liability is the liability of the company. When the Directors enter into some contract ,they are not liable on such contracts provided they act with in the

authority given to them. The company alone would be liable . Directors as Managing Partners-They do all work of the company on behalf of other shareholders. Directors are not Employees of the company-No master servant relationship between company and its directors Directors as Trustees Directors are not trustees in the real sense of the term. But they occupy a position similar to that of trustees. They have to exercise their powers in the best interest of the company and in good faith. Directors as Officer Section 3(30) provides that director is officer of the company and he can be held responsible under section 3(31) as a in officer in default.

Appointment of Directors

Appointment of First Directors-Section 254 - Appointed by subscribers to the M/A if their names are not mentioned in the A/A. - If the first directors are mentioned in the A/A they become the first directors - If no persons are named in the A/A as directors and not appointed by the subscribers to the M/A then those subscribers who are individuals will become directors automatically. Appointment by company in AGM In a public company 2/3 of the directors should be retiring and every year 1/3 should retire every year and in their place new directors are appointed .The retiring directors can also be reappointed.

Appointment by Directors a) Additional Directors- If authorized by articles .Such directors will hold office till the next AGM. b) Casual Directors-Casual Vaccancies caused by death ,retirement, resignation of directors.The board can appoint directors to such vacancies .Will hold office

till the expiry of the tenure of the director in whose place he is appointed. c) Alternate Directors-Appointed by the Board when a director is absent from the country for more than 3 months. He ceases to be a director on the return of the original director . d) Appointment by third parties-By banks and FIs when they lend money as per the terms and conditions of the loan agreement. Appointment by Central Government Section 248 Appointed by the Central Government on an order passed by the Company Law Board to safe guard the interest of shareholders when oppression or mismanagement is proved. Qualification No academic qualification prescribed Share qualification may be prescribed by the A/A. The amount of such shares shall not exceed a nominal value of Rs 5000 or the value of one share where the nominal value exceeds Rs 5000.

Disqualification of Directors Section 274 A person cannot be appointed as director if Found to be of unsound mind by a competent court Is an un discharged insolvent Has applied to be adjudicated as an insolvent Has been convicted of an offence involving moral turpitude for a period of not less than 6 months and a period of 5 years has not elapsed since the expiry of such sentence Has not paid any call in respect of the shares of the company held by him and a period of 6 months are over after the expiry of last day for such payment. He has been disqualified by the order of a court u/s 403-offence in relation to promotion, formation or management of a company.

A person cannot be director in more than 15 companies at a time. Excluding - Private companies

- Unlimited Companies - Association carrying on business not for profit - Where such person is only an alternate director

Vacation of Office by Directors The office of Director will be vacated if Fails to obtain qualification shares Found to be of unsound mind by a competent court Applied to be adjudicated as an insolvent Adjudged as an insolvent Convicted by a court Failure to pay calls on shares. Absent from 3 consecutive board without obtaining leave of absence - 939