Introduction: What is a director?
What exactly is a director?
A director is someone who is chosen or appointed to handle the management and operations of a company. A minimum of two directors are required for a Private Limited company whereas a minimum of three directors are required for a Public company The company registers the records of who your directors are and crucial information about them.
According to the Companies Act, a maximum of 15 persons can be appointed to the board of directors. Generally, shareholders are the ones who appoint directors. A business, organization, or law firm having a fictitious legal personality cannot be nominated as a director. It needs to be a real person.
Who can be a director?
- A real person can only become a director of a company. A person who is not a person is unqualified to be a director.
- Furthermore, a minor cannot become a director of the company since he is not qualified to receive a DIN and cannot file for legal permission to operate as a director.
- At least one director of the company must be an Indian resident.
- Furthermore, the individual functioning as a director must be of sound mind, capable of entering into a contract, and not bankrupt.
What are the Powers and Duties of a Director?
The Director’s Duties
- Act in good faith in line with the company’s Memorandum and Articles of Association.
- To act in the best interests of the company and its stakeholders.
- Carry out his responsibilities with appropriate caution and reasonable care.
- To not to get engaged in a scenario in which his interests collide with those of the company.
- Do not delegate his office to anyone else.
- Do not acquire an unfair advantage or benefit.
- To ensure the accurate and timely submission of various legal compliances of the company under various acts Income Tax Act, GST, MCA, etc
The Director’s Powers
According to the Companies Act of 2013, the Board of Directors of the company has the following powers:
- The authority to make calls on money owed on shares.
- Meetings can be called on the spur of the moment.
- Issue stock, debentures, or other securities in the name of the company.
- Borrow and invest cash/funds for the benefit of the company.
- To approve the financial statements and the board report.
- To approve Employee bonuses.
- To declare Dividends.
- Capability to make loans or guarantee loans
- Authorize the purchase of securities
- Approve the merger/merger/takeover.
- Diversify the company’s business.
What Qualities a Director should possess?
Your abilities as a director are an important aspect of your reputation. Each director should contribute a unique set of talents and expertise to each board position.
Director talents are divided into two categories: job-specific abilities and expertise, and personal traits that you bring to a role. Developing and maintaining your director skill set may be viewed as a balancing act between the non-negotiable talents required to fulfill director tasks correctly (for example, finance, governance, and strategy) and those that make you a competent and successful leader and team member.
How Are the Directors Appointed?
The shareholders appoint two-thirds of the directors in a public or private company.
In the event of a private business, the procedure for appointing all directors might be specified in the Articles of Association. If the articles remain silent, the shareholders must appoint the directors.
The Companies Act also includes a provision that allows a business to appoint two-thirds of its directors following the idea of proportional representation. This occurs if the firm has implemented this policy.
To combat mismanagement and misbehavior, nominee directors will be nominated by third-party agencies or the government. Directors must behave honestly and with reasonable care and competence when fulfilling their obligations on behalf of the organization.
What is the Process of Appointment 0f Directors ?
What documents are needed for the appointment of a director?
1. Documents required from the Director: PAN Card, Proof of Residence, DIN Declarations, Consent Letter for Appointment, and so on.
2. Documents Required from the Company: Board Meeting Resolution for Appointment and Letter of Appointment
What is a Director's Consent Letter?
What forms must be filled out to add a director to a company?
Form DIR-12 is submitted to the MCA portal for director appointment. You can visit https://www.mca.gov.in/MinistryV2/companyformsdownload.html to download Director’s appointment form and related FAQ’s on it.
What are the costs and expenses for nominating a director?
What are the Consequences When Incorrect Information Is Filed On The Form by the Directors?
Penalty and Imprisonment
The Distinction Between Expert And Generalist Knowledge In The Boardroom
Are the Directors liable for the company’s debt , liabilities , payables or due?
The Tax Planet’s View
- Are you a director in any company?
- Whether you perform your legal duties and responsibilities as a Director?
In this blog post, we tried to give you the Complete Guide To Directors And Their Role.
Is this information helpful? If you want to know more, let us know and we will assist your query as soon as possible. If you want to suggest anything, we will be happy to hear. comment below in the comment section for any query.