Directors do not have any rights under the Companies Act; whatever powers the directors exercise are the rights of the Board of Directors. Therefore, the rights of the director mean the rights of the board of directors. The rights of operators can be divided into two parts
(I) General rights- General rights can include the following
.jpeg "What are the rights of a managing director?")
(1) All rights related to management - The Board of Directors has been given the right to exercise all the rights related to the management of the company which are mentioned in the Board of Directors' Memorandum and Articles of Association.
(2) Right to inspect the account books – Every director of the company has the right to inspect the account books, statutory books, and other documents.
(3) Right to receive information about meetings – Directors have the right to receive information about all meetings of the company, this information should be in writing. Such information will be sent to their registered address.
II) Special rights – The following rights can be made effective only by the Board of Directors and in the meeting of directors.
(A) To demand from the shareholders for the money unpaid on shares.
(B) To issue debentures.
(C) Taking loans in any form other than debentures.
(D) To invest the company's money.
(E) Taking a loan.
Apart from the above, the following tasks are also done by the directors in their meetings.
(A) Filling of vacant position – If any vacant position suddenly becomes vacant then it is filled by appointing a new director.
( B) Appointing a manager – Directors can appoint any person as manager.
(C) Contribution to the National Security Fund – Operators can contribute to the National Security Fund and account for it in the profit and loss account.
Restrictions on the rights of directors or board of directors
These restrictions are as follows
(1) Permission in the general meeting - The board of directors of any public company or its subsidiary private company cannot do the following without the approval of the general meeting of the company,; these are called restrictions on the rights of the board of directors.
(i) To sell, lease, or in any other way give away the whole or substantially the entire business of the company.
(ii) To cancel the debt of an operator completely or to give more time for payment. This rule will not apply to the renewal or continuation of advances given by a banking company to the operator in the ordinary course of business.
( iii) To invest the amount of compensation received by the company as a result of compulsory taking of the building, property, or undertaking in anything other than trust securities.
(2) Donation to political parties, - After the commencement of this Act, the board of directors of a public company shall not, without the consent of the company, donate funds or other funds which are not directly related to the business of the company or the welfare of its employees. Will not be able to give more than the amount in a financial year which is more than ₹ 50,000 or the average profit of the net profits of the 3 financial years preceding that year. The Board of Directors can give this amount for charitable purposes. In case of violation of this, a fine equal to 5 times the amount of donation can be imposed on the company and the guilty rights of the company can be punished with imprisonment up to 6 months and a fine equal to 5 times the amount of donation.
(3) Donating to the National Security Fund - The company's board of directors or the person exercising its rights or the general meeting of the company may donate appropriate amount to the National Security Fund or a fund recognized by the Central Government created for national security. But this amount should be shown in the profit and loss account for the same year.
(4) Right not to remove a member - The Board of Directors cannot remove any member by changing its articles of association, even if a special resolution has been passed in the extraordinary meeting thereafter.
(6) Upon winding up by creditors – The rights of the directors cease to exist when a liquidator is appointed upon voluntary winding up by creditors. If the investigation committee wishes, it can approve the continuation of the rights of the directors. If an investigation committee has not been appointed in the company, the creditors can approve such rights in the general meeting.
The duties of the operators are divided into the following three parts
(I) According to the articles of association
Usually, the directors' duties are mentioned in the articles of association of the company, hence the directors should work within their jurisdiction as per the articles of association.
(II) Duties under the Company Act
The following duties of operators are included under this Act:
(1) To verify the correctness of the prospectus and sign it.
(2) To apply and pay the allotment amount on the shares held by the directors themselves.
(3) To get the certificate of commencement of business for the company, it should declare that all the statutory proceedings have been completed.
(4) Signing the annual certificate.
(5) Taking qualifying shares within 2 months of the date of appointment.
(6) Giving written consent to become a director.
(7) A meeting of the Board of Directors must be called at least once in 3 months.
(III) Duties based on the decision of judges
Based on the decision of the judges, the operator has the following duties
(i) Honesty, alertness, efficiency and hard work.
(ii) To do one's work with common knowledge and experience.
(iii) The directors should take an interest in the company's work by attending every meeting.
(iv) Directors should see that any employee given important powers about the business is not misusing them.
Before signing the cheque, the directors should know the necessary things about it so that the company does not have to suffer any loss.
The responsibilities of can Directors be divided into three parts
(A) Responsibility towards external or third parties The directors act on behalf of the company in the capacity of agents of the company. In such a situation, one cannot be held personally liable toward external parties unless one
Work within the rights. Therefore, the directors will be personally liable towards third parties only under the following circumstances:
(1) Liability for acting outside their rights - When they act outside their rights but reveal to others that the work done by them comes under their rights, then in such a case they are liable to other parties. Are responsible.
(2) Misrepresentation in the prospectus – In case of misrepresentation in the prospectus, the directors will be responsible for the loss suffered by the shareholders.
(3) On entering into a contract in one's own name - Directors are considered liable if they enter into a contract in their own name instead of the company.
(B) Responsibility towards the company
This includes the following responsibilities
To get the certificate of commencement of business for the company, it should declare that all the statutory proceedings have been completed.
(4) Signing the annual certificate.
(5) Taking qualifying shares within 2 months of the date of appointment.
(6) Giving written consent to become a director.
(7) A meeting of the Board of Directors must be called at least once in 3 months.
(III) Duties based on the decision of judges
Based on the decision of the judges, the operator has the following duties
(i) Honesty, alertness, efficiency and hard work.
(ii) To do one's work with common knowledge and experience.
(iii) The directors should take an interest in the company's work by attending every meeting.
(iv) Directors should see that any employee given important powers about the business is not misusing them.
Before signing the cheque, the directors should know the necessary things about it so that the company does not have to suffer any loss.
.jpeg)
.jpeg)
.jpeg)
.jpeg)
.jpeg&description=What are the rights of a managing director?){kind=link}
0 Comments