1. Unit - 2
Board of
Directors
By Radhika

2. Who is Director?

3. Types of Directors
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Director
Inside director
Outside Director
Executive director
Non-Executive Director
Shadow director

4. Definition of Director
• Sec. 2(26) “Managing Director” means
“A director who, by virtue of an agreement with the co.
or of a resolution passed by the co. in general meeting
or by Board of directors or, by virtue of its
memorandum or articles of association, is entrusted
with [substantial powers of management] which
would not otherwise be exercisable by him, &
includes a director occupying the position of a
managing director, by whatever name called:”

5. Cont.
• Provided that,
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Power to do administrative acts
Common seal
To draw or endorse any cheque
To draw or endorse any negotiable instruments
To sign any certi. Of share
To direct registration of transfer of share,
Will not be deemed to be included within
substantial powers of mgt.

6. Personality Traits of a
Director
1. The Willingness to Do More
2. The Ability to Adapt and Adjust
3. Diligence and Persistence
4. Creativity and Innovation
5. Adept Learning and Researching Skills
6. Keen Observation
7. Competitive Drive
8. Communication Skills
9. Effective Leadership Qualities
10. Kindness and Strong Ethics

7. Appointment of Director
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First Director by AoA
By Company
By Directors
By Third Parties
By court of law
By Central Government

8. Power of Director
Section 292(1) of the Companies Act, 1956 provides that the Board
of directors of a company shall exercise the following powers on
behalf of the company and it shall do so only by means of
resolution passed at meeting of the Board:
(a) the power to make calls on shareholders in respect of money
unpaid on their shares;
(aa) the power to authorize the buy-back referred to in the first
provision to clause
(b) the power to issue debentures;
(c) the power to borrow moneys otherwise than on debentures;
(d) the power to invest funds of the company; and
(e) the power to make loan.

9. DUTIES of Directors
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To file return of allotment
Not to issue irredeemable preference share after 20 Years
To disclose interest
To disclose receipt from transfer of property
To disclose receipt of compensation from transferee of shares
Duty to attend Board meetings
To convene statutory, Annual General meeting (AGM) and
also extraordinary general meetings
8. To prepare and place at the AGM along with the balance sheet
and profit & loss account a report on the company’s affairs
including the report of the Board of Directors

10. Cont.
9. To authenticate and approve annual financial statement
10. To appoint first auditor of the company
11. To appoint cost auditor of the company
12. To make a declaration of solvency in the case of Members.
voluntary winding up
• General Duties:

11. LIABILITES of
Director
1. Liability to the company
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Breach of fiduciary duty:
Ultra vires acts:
Negligence:
Mala fide acts:
1. Liability for breach of statutory duties
2. Liability for acts of co-directors
3. Criminal liability

12. Legal Position of
Director
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Director as an Agent
Director as Managing officer
Director as a Trustee
Director as an Employee
Director as Whole Time Director or Managing
Director