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Commercial Correspondence and Secretarial Practice · Class 12 Commerce

Ch 5Directors of a Company — Class 12 Commercial Correspondence and Secretarial Practice, concept-first.

A company, however large its business, cannot act by itself — being an artificial legal person created by registration, it has no mind and no hands of its own. It can only think and act through natural persons whom the law recognises as competent to decide on its behalf, and the persons occupying that decision-making r…

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Key concepts

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Meaning of a Director and the Board of Directors

A company, being an artificial legal person, can act only through natural persons the law recognises as competent to decide on its behalf — these persons are its directors.

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Chapter contents

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1

Meaning of a Director

A company, however large its business, cannot act by itself — being an artificial legal person created by registration, it has no mind and no hands of its own.

2

The Board of Directors

Section 2(10) of the Companies Act, 2013 defines the "Board of Directors" or "Board," in relation to a company, as the collective body of the directors of the company.

3

Minimum and Maximum Number of Directors

Section 149(1) of the Companies Act, 2013 fixes both a floor and a ceiling on the size of a company's Board.

4

Types of Directors

The Companies Act, 2013 does not treat every director as identical — different categories of directors are appointed for different purposes, carry different responsibilities, and are subject to somewh…

5

Director Identification Number (DIN)

Before a person can be appointed a director of any Indian company, the Companies Act, 2013 requires that person to hold a unique identifying number issued by the Central Government — the Director Iden…

6

Appointment of Directors

The Companies Act, 2013 recognises several distinct routes by which a person becomes a director, reflecting the different circumstances in which a directorship needs to be filled — at incorporation, a…

7

Qualifications and Disqualifications of Directors (Section 164)

The Companies Act, 2013 does not prescribe a positive list of formal educational or professional qualifications for an ordinary director — unlike, say, the mandatory ICSI membership required of a Comp…

8

Legal Position of Directors

Company law has long struggled to pin the legal position of a director to a single, familiar label, because directors genuinely combine features of several different legal relationships depending on w…

9

Powers and Duties of Directors (Section 166)

The general powers of management of a company are vested in its Board of Directors collectively by Section 179 of the Companies Act, 2013, subject to the memorandum, the articles, and any regulations…

10

Removal, Vacation of Office, and Remuneration of Directors

A director's tenure can end in more than one way, and the Companies Act, 2013 distinguishes carefully between removal by the shareholders and automatic vacation of office arising from the director's o…

Exercises

+Show 14 questions14 questions
  1. Q1Define the term "director" under the Companies Act, 2013. What is meant by the "Board of Directors"?Free
  2. Q2Explain why the Board of Directors is described as a "collective body" and what this means in practice for how a company's decisions are tak…Free
  3. Q3State the minimum and maximum number of directors prescribed for a private company, a public company, and a One Person Company under the Com…Free
  4. Q4Explain, with the help of a table, the different types of directors recognised under the Companies Act, 2013.Preview
  5. Q5What is an Independent Director? State the criteria of independence and the requirement for appointing independent directors under the Compa…Preview
  6. Q6What is a Director Identification Number (DIN)? Explain its purpose and the procedure for obtaining one.Preview
  7. Q7Explain the different modes of appointment of directors recognised under the Companies Act, 2013.Preview
  8. Q8What is meant by appointment of directors by proportional representation? Why does the Companies Act, 2013 permit this method?Preview
  9. Q9State the disqualifications for appointment of a director under Section 164(1) of the Companies Act, 2013.Preview
  10. Q10Explain the disqualification of directors under Section 164(2) of the Companies Act, 2013 arising from a company's own default. How does thi…Preview
  11. Q11Discuss the legal position of directors in a company. Are directors agents, trustees, or employees of the company?Preview
  12. Q12Explain the duties of directors as laid down under Section 166 of the Companies Act, 2013.Preview
  13. Q13Distinguish between removal of a director under Section 169 and vacation of office under Section 167 of the Companies Act, 2013.Preview
  14. Q14What is meant by remuneration of directors? Briefly explain the statutory limits on managerial remuneration under the Companies Act, 2013.Preview

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 29 questions29 questions
  1. Q1If workload in one department of the company exceeds another then, in which process are the employees involved? (a) Promoted (b) Resign (c)…Preview
  2. Q2What is the minimum number required as directors in a public company? (a) 2 (b) 4 (c) 3 (d) 5Preview
  3. Q3Write the definition of Director according to Companies Act.Preview
  4. Q4In how many maximum companies a person can function as a Managing Director?Preview
  5. Q5Why is an investigation committee appointed?Preview
  6. Q6When is appointment of a female director essential?Preview
  7. Q7In which circumstances is the director to be retired?Preview
  8. Q8Write difference between Managing Director and Director.Preview
  9. Q9Draft a letter regarding the transfer of an employee.Preview
  10. Q10Draft a letter in the form of notice asking an employee a clarification for not remaining present in the office during his duty hours.Preview
  11. Q11When the employee frequently commits indiscipline, which punishment does the business firm give, as the last resort? (a) (A) Promotion (b) (…Preview
  12. Q12In how many companies can a person become director? (a) (A) 10 (b) (B) 20 (c) (C) 30 (d) (D) 40Preview
  13. Q13When does the term of the first director expire? (a) (A) Never (b) (B) After completion of five years (c) (C) On the day of the first genera…Preview
  14. Q14How many minimum Directors required in single person company?Preview
  15. Q15What is Direct Recruitment and Indirect Recruitment?Preview
  16. Q16When is a nominee director appointed?Preview
  17. Q17How can a director resign from his office? Explain.Preview
  18. Q18Differentiate between Managing Director and Director.Preview
  19. Q19Draft a letter in the form of notice asking an employee a clarification for not remaining present in the office during his duty hours.Preview
  20. Q20Draft a letter informing an employee about demotion for breaching of discipline.Preview
  21. Q21Which of the following is not mentioned in the letter of personal interview? (a) (A) Venue of personal interview (b) (B) Time of the persona…Preview
  22. Q22How much can be paid as remuneration to all full time Managing Directors? (a) (A) 5% of sales (b) (B) 5% of net profit (c) (C) 5% of share c…Preview
  23. Q23How many independent directors can a company have? (a) (A) 1/4 (b) (B) 2/3 (c) (C) 3/4 (d) (D) 1/3Preview
  24. Q24Who manages the company in modern time?Preview
  25. Q25Who is an independent director?Preview
  26. Q26"Directors are trustee - but they are not" Explain.Preview
  27. Q27Write down notes on Directors' identification number.Preview
  28. Q28In consideration of special academic qualification of an employee he has been promoted. Draft a letter informing him of the promotion.Preview
  29. Q29Rohit Bhavsar, an employee of the Shyam Industries remained absent from duty for 3 consecutive days without taking permission of the officer…Preview