In this article, Akriti Shikha pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses duties and responsibilities of a Director of a Private Limited Company.

INTRODUCTION

Private companies are a standout amongst the most widely recognized business entity in India. In a private Ltd. company, the Directors assume a critical part amid the incorporation procedure and post-joining process. Organization Director’s are in charge of the administration of their organizations and have duties to the organization’s representatives, its exchanging accomplices and the state. As a Director, one needs wide powers to help in advancing the organization. In any case, they confront genuine penalties in the event of manhandling of those forces.

Private ltd. company requires at least two directors, two members, and two shareholders to enroll itself lawfully. Be that as it may, a most extreme of fifteen directors is permitted in an organization according to the Companies Act, 2013 laid out by Ministry of Corporate Affairs.

MEANING OF DIRECTOR IN PRIVATE LIMITED COMPANY

Directors refers to as someone designated to the Board of a Company. Board of Directors refers to a group of individuals elected by the shareholders of a company to deal with the issues of company. Thus, Director is a man named or chosen by law, who manages, controls or coordinates the undertakings of an organization.

REQUIREMENTS TO BECOME A PRIVATE LIMITED COMPANY DIRECTOR

Appointment of a Director is not only a crucial managerial prerequisite, as well as a procedural necessity that must be satisfied by each organization. Only an individual can be appointed as a Director- a corporate, firm, association or other bodies with artificial legal personality cannot be appointed as a Director.

For a person to become a director in a Private Ltd. Company, such person is required a Director Identification Number (DIN) which can be obtained for any individual over the age of 18 years. Additionally, a Digital Signature Certificate (DSC) is required. The director cannot have a criminal record. He shouldn’t have been detained anytime before his appointment as a director.

As to residency necessities of a director, there is nothing in Companies Act, 2013 that denies the appointment of any individual who is a foreigner or NRI as a director of a Company.

MANNER OF APPOINTMENT

In a Private Ltd. Company, Articles of Association can recommend the way of appointment of any everyone of the Executives. In the event that Articles of Association are silent, the directors must be selected by the shareholders. Companies Act,2013 likewise allows the Articles to accommodate the appointment of 2/3^rd of the directors as indicated by the principle of proportional representation, if so received by the organization being referred to.

DISQUALIFICATIONS FOR APPOINTMENT OF DIRECTOR

A person shall not be qualified for appointment as a director of an organisation, if:

• He is of unsound mind and stands so declared by a competent court;
• He is an undischarged insolvent;
• He has applied to be adjudicated as an insolvent and his application is pending;
• He has been indicted by a court of any offence, regardless of whether including moral turpitude or something else, and sentenced in regard thereof to detainment for at the very least six months and a time of five years has not slipped by from the date of expiry of the sentence.
• An order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;
• He has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;
• He has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or
• He has not got the DIN.

TYPES OF DIRECTORS

1. First Directors

The first directors of most of the organisations are named in Articles of Association. In the event that Articles does not specify it, then subscribers to Memorandum of Association who are individuals shall be deemed to be until the directors are duly appointed.

2. Additional Directors

Anantalakshmi v Indian Trade & Investment Ltd[1] held that if the Articles of Association specifically provides, the Board has the discretion, where it feels it necessary and expedient, to appoint Additional Directors. However, an individual who fails to get appointed as a director in a general meeting cant be designated as Additional Director. They hold the position for a limited term i.e upto the date of following Annual general meeting or the last day on which meeting ought to have been held whichever is earlier.

3. Alternate Director

Alternate Director is somebody appointed by the Board of Directors in a general meeting to represent a director called the “original director” during his absence for a period of not less than three months from India.

4. Nominee Directors

Subject to the Articles of a company, the Board may appoint any individual as a director nominated by any financial institution in pursuance of the provisions of any law or of any agreement. Banks and Private Value speculators who concede obligation or value help to an organization for the most part force a condition as to appointment of their delegate on the Board of the concerned Organization. These nominated persons are called as Nominee Director.

5. Resident director

Every Private ltd. company must have no less than one director who resides in India for a total of not less than 182 days in the previous calendar year from the date of incorporation.

6. Managing Directors

A Managing Director is a Director who has substantial powers of management of the undertakings of the company subject to the superintendence, control and direction of the Board being referred to. It prohibits regulatory acts of a routine nature when so authorized by the Board such as the power to affix the common seal of the company to any document or to draw and endorse any cheque on the account of the company in any bank and so forth.

7. Whole-time/ Executive Director

A Whole time or an Executive Director incorporated a director who is in the whole-time employment of the company, commits his whole-time of working hours to the company being referred to and has a significant personal interest in the company as his source of income.

8. Ordinary Director

An Ordinary Director is a simple director who attends the board meetings of a company and participates in the matters put before the Board of Directors. These directors are neither whole- time Directors or Managing Directors.

WOMEN DIRECTOR REQUIREMENTS

There is no women Director requirements for a private ltd. company. However, every listed company and limited company having a paid-up share capital of Rs. 100 crore rupees or more or turnover of Rs. 300 crores or more are required to name atleast one woman Director.

DUTIES OF DIRECTORS

The following duties and liabilities have been imposed on the directors of companies, by the Companies Act of 2013 are:

• A director of a company shall act as per the Articles of Association of the company.
• A director of the company should act in good faith, in order to advance the objects of the company, for the advantages of the organization in general, and to the greatest advantage of the partners of the organization.
• A director of a company should practice his obligations with due and sensible care, expertise and industriousness and might practice free judgment.
• A director of a company shall 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.
• A director of a company s should not accomplish or endeavor to accomplish any undue pick up or advantage either to himself or to his relatives, accomplices, or partners and if such chief is discovered liable of making any undue gain, he might be subject to pay a sum equivalent to that pick up to the organization.
• A director of a company shall not relegate his office and any task so made should be void.

If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one Lakh Rupees and which may extend to five Lakh Rupees.

REMOVAL OF DIRECTORS

A Private ltd. company by ordinary resolution in an Annual general meeting or an extra ordinary General meeting can remove a director. Special Notice about the resolution to remove a director should be given to the members with a copy of the respective notice to be sent to the director to be removed. The director is given an opportunity of being heard in the meeting. If the director gives any written representation to the notice, then the said representation is given to all members. If the representation could not be given to all members, then the Director can request the said representation to be read out in the meeting. The members can pass an ordinary resolution, by simple majority and remove the director. The Company shall within 30 days from the removal of a director file Form No.32 and a copy of the resolution with the Registrar.

RESIGNATION OF DIRECTOR

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 Director’s Report of subsequent general meeting of the company and post the information on its website. The director should also forward a copy of resignation with detailed reasons for the resignation to the Registrar.

CONCLUSION

Along these lines, Companies Act, 2013 is absolutely an extremely creative and milestone enactment in regard of the obligations and duties of the executives of organizations moreover. Both general classes of chiefs, to be specific, the executives having financial association with the organization, and the free chiefs, have been appropriately thought to be under this develop enactment for executives. It looks to make the corporate administration and administration in India rather effective, completely responsible, straightforward, and maximally gainful to all partners and related experts, through this insightful enactment over obligations and duties of chiefs in Indian organizations.

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References

• http://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
• https://www.legalraasta.com/director-in-pvt-ltd-company/
• https://www.icsi.edu/portals/0/APPOINTMENT%20AND%20QUALIFICATIONS.pdf
• http://www.caclubindia.com/articles/the-companies-act-2013-provisions-for-directors-18413.asp

[1] AIR 1953 Mad 467, (1953) IMLJ 275