Company Management: Roles and Responsibilities of Directors
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Questions and Answers

What is the maximum number of directors that can be appointed by the Board of Directors?

  • Only by shareholders
  • Unlimited
  • Fixed in the Articles (correct)
  • Specified by the Central Government

    • Why can the Central Government appoint directors?

  • To elect new shareholders
  • To reduce the number of directors
  • To prevent mismanagement (correct)
  • To increase the number of directors

    • What is the maximum period for which directors appointed by the Central Government can serve?

  • Three years (correct)
  • Five years
  • One year
  • Ten years

    • What is required for the Central Government to appoint directors?

    <p>Order from the Company Law Board</p> Signup and view all the answers

    What is the purpose of appointing nominee directors?

    <p>To have effective control on the company</p> Signup and view all the answers

    Who can appoint alternate directors?

    <p>The Board of Directors</p> Signup and view all the answers

    Under what circumstances can alternate directors be appointed?

    <p>During the absence of an existing director for more than three months</p> Signup and view all the answers

    What is the characteristic of directors appointed by the Central Government?

    <p>They are not required to hold qualification shares and are not subject to retirement by rotation</p> Signup and view all the answers

    What is the minimum number of directors required for a public company?

    <p>Three</p> Signup and view all the answers

    What is the role of the Board of Directors in a company?

    <p>To govern and control the management</p> Signup and view all the answers

    Who elects the directors of a company?

    <p>Shareholders</p> Signup and view all the answers

    What is the primary function of the directors in a company?

    <p>To direct, govern, and control the management</p> Signup and view all the answers

    What are the directors considered to be in relation to the company?

    <p>Agents, trustees, and managing partners</p> Signup and view all the answers

    What is the requirement for a person to become a director?

    <p>Must be competent to enter into a contract</p> Signup and view all the answers

    What is the statutory provision related to directors in the Companies Act?

    <p>Sections 252 to 323</p> Signup and view all the answers

    How many directors are required for a private company?

    <p>Two</p> Signup and view all the answers

    What is a director according to Sec. 2(30)?

    <p>An officer of a company</p> Signup and view all the answers

    What is the minimum number of directors required for a public company?

    <p>Three</p> Signup and view all the answers

    Who appoints the auditor of a company?

    <p>Board of Directors</p> Signup and view all the answers

    What is the primary responsibility of the CEO?

    <p>Making major corporate decisions</p> Signup and view all the answers

    What is the role of the auditor?

    <p>Reviewing and verifying financial records</p> Signup and view all the answers

    Who is the highest-ranking executive in a company?

    <p>CEO</p> Signup and view all the answers

    What is the minimum number of directors required for a private company?

    <p>Two</p> Signup and view all the answers

    Who presides over every meeting of the Board of Directors?

    <p>Chairman</p> Signup and view all the answers

    How many days' notice is required to be sent before the date of the extraordinary general meeting?

    <p>21 days</p> Signup and view all the answers

    What is the quorum for a Public limited company in an extraordinary general meeting?

    <p>5 members</p> Signup and view all the answers

    Where must the resolution passed at the extraordinary general meeting be filed?

    <p>With the Registrar of Companies (ROC)</p> Signup and view all the answers

    Who can call an extraordinary general meeting of the company?

    <p>Either the Board of Directors or the Shareholders</p> Signup and view all the answers

    What percentage of paid-up share capital is required to requisition an extraordinary general meeting?

    <p>One-tenth</p> Signup and view all the answers

    What must the requisition made under sub-section (2) set out?

    <p>The matters for the consideration of which the meeting is to be called</p> Signup and view all the answers

    Who must sign the requisition sent to the registered office of the company?

    <p>The requisitionists</p> Signup and view all the answers

    Under which section is the calling of an extraordinary general meeting governed?

    <p>Section 100</p> Signup and view all the answers

    Who is responsible for making arrangements for annual general meetings of a company?

    <p>Company Secretary</p> Signup and view all the answers

    What is the minimum number of days' notice required before a general meeting of shareholders?

    <p>21 days</p> Signup and view all the answers

    How should notices for general meetings of shareholders be sent?

    <p>By hand delivery, post, fax, or email</p> Signup and view all the answers

    What should be attached along with the notice of a general meeting of shareholders?

    <p>Attendance slip and proxy form</p> Signup and view all the answers

    What is the purpose of convening a Board meeting before the annual general meeting?

    <p>To discuss and approve the annual accounts</p> Signup and view all the answers

    When should the Auditor's report on the accounts be secured?

    <p>Before the Board meeting</p> Signup and view all the answers

    What should be displayed on the company's website?

    <p>The notice of the annual general meeting</p> Signup and view all the answers

    What should not be taken up at the time of the annual general meeting?

    <p>Any item not mentioned in the notice and agenda</p> Signup and view all the answers

    Study Notes

    Role and Responsibilities of Directors

    • Directors are responsible for directing, governing, and controlling the management of their company.
    • They function as a group, with the Board of Directors being the principal authority in company management.
    • Directors are elected representatives of shareholders and are given substantial powers of management.
    • They must honour legal provisions regarding their qualifications, appointment, retirement, and use of powers.
    • The Board of Directors is a must for the management and administration of a company under the Companies Act.
    • Directors are elected representatives of shareholders and are given substantial powers of management.
    • Such powers are not to be used individually but collectively by all directors, i.e., by the Board of Directors.
    • The statutory provision relating to Directors is given in Sections 252 to 323 of the Companies Act.

    Qualification of a Director

    • Any person who is competent to enter into a contract can become a Director.
    • Additional Directors can be appointed by the Board of Directors, subject to the maximum number of directors fixed in the Articles.
    • Alternate Directors can be appointed in place of an existing Director, during their absence of more than three months.

    Appointment of Directors by the Central Government

    • The Central Government may appoint directors to prevent mismanagement, with the number of directors specified by the Company Law Board.
    • Such directors are appointed for a period not exceeding three years on any one occasion.
    • They are not required to hold any qualification shares and are not subject to retirement by rotation.

    Nominated Directors

    • Directors can be nominated by third parties, such as financial institutions, on a non-rotational basis.
    • These "Nominee" directors are usually appointed by financial institutions providing huge financial support to the concerned company.

    Summary

    • A director is an officer of the company, acting as an agent of shareholders and looking after the management of the company.
    • The Board of Directors is the top administrative organ of the company, with individual members being called Directors.
    • Every public company must have at least three directors, and every private company must have at least two directors.

    Chairman of the Board of Directors

    • The Chairman of the Board of Directors presides over every meeting of the Board.
    • Regulations regarding the appointment of a chairman are given in the Articles of a company.

    Chief Executive Officer (CEO)

    • The CEO is the highest-ranking executive in a company, responsible for making major corporate decisions and managing overall operations and resources.
    • The CEO acts as the main point of communication between the Board of Directors and the company.

    Auditor

    • An auditor is appointed by the Board of Directors to review and verify the accuracy of financial records and ensure compliance with tax laws.
    • The auditor protects businesses from fraud, points out discrepancies in accounting methods, and may work on a consultancy basis to boost operational efficiency.

    Extraordinary General Meeting

    • An Extraordinary General Meeting (EGM) can be called by the Board of Directors or by shareholders holding at least one-tenth of the paid-up share capital.
    • The notice of the meeting must be sent 21 days in advance, and the quorum for a public limited company is five members, and two members for a private limited company.

    Notice of General Meeting

    • Every member of the company should receive a written notice of the meeting.
    • Notices should be sent to other important persons, such as auditors, secretarial auditors, and debenture trustees if necessary.
    • The notice should specify the nature of the meeting and business to be transacted, and should be sent at least 21 days in advance.
    • Attendance slips and proxy forms should be attached to the notice with clear instructions.

    Company Secretary

    • The Company Secretary is responsible for making all arrangements for holding the annual general meetings of the company.
    • The Company Secretary must perform various functions and duties, including convening a Board meeting, inviting the Auditors for their report, and transacting business at the meeting.

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    Description

    This quiz covers the functions and authority of the Board of Directors in a company, including their role in management and governance. It also touches on the requirements for public companies and the relationship between directors and shareholders.

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