ch 3 part 1

Question 1

define director?

Answer 1

any person occupying yhe position of director
(The definition focuses on function and position and not on specific designation and the word ‘director’ in a job title does not necessarily mean that a person is legally a director)

Question 2

characterstics of director

Answer 2

1.natural person
2.to be a member
3.Not to be variable representative
4.authority
5.Fiduciary relationship
6.Consent to act as director
7.Consent to act as director

Question 3

minimum number of directors

Answer 3

SMC 1
pvt 2
public unlisted 3
public listed 7

Question 4

ineligibility of a person to become director

Answer 4

1. minor
2. unsound mind
3. has applied to be adjudicated as an insolvent and his application is pending
4. undischarge insolvent
5. has been convicted by court of law for offence involving moral terputes
6. has been debarred from holding such office
7. is lacking fiduciary behaviour and a declaration to this effect has been made by the Court at any time during the preceding 5 years
8. does not hold National Tax Number. The Commission may grant exemption from this requirement
9. is not a member. However, this shall not apply in the case of:
   a person representing a member who is not a natural person
   a whole-time director who is an employee of the company
   a chief executive
   a person representing a creditor or other special interests through contractual arrangements

Question 5

for listed companies who shall not be appointed as a director

Answer 5

1. has been declared by a court as defaulter in repayment of loan to a financial institution
2. is engaged in the business of brokerage or is a spouse of such person or is a sponsor, director or officer of a corporate brokerage house.

Question 6

ineligibility of bankrupts

Answer 6

if any person who is undischarge insolvent act as director shall be liable to imprisonment for a term not exceeding two years or to a fine, or to both.

Question 7

appointment of first and additonal director

Answer 7

first directors
The names and number of first directors shall be decided by the subscribers of memorandum, and their specified
particulars shall be submitted along with the documents for incorporation.
additional directors
Number of first directors may be increased by appointing additional directors in general meeting.

Question 8

Term of office of first and subsequent directors

Answer 8

first directors
The first directors shall hold office until the election of directors in the first annual general meeting of the
company
subsiquent directors
An elected director shall hold office for a period of three years unless he earlier resigns or otherwise ceases to
hold office.

Question 9

term of office of directors of a company limited by guarantee and not having share capital

Answer 9

the term of office of directors of a company limited by guarantee and not having share capital may be
a period of less than three years as provided in the articles.

Question 10

Duty of retired directors

Answer 10

The directors so continuing to perform their functions shall:
1.take immediate steps to hold the election of directors; and
2.in case of any impediment, report such circumstances to the registrar within 45 days before the due date of the annual general meeting or extra-ordinary general meeting, as the case may be, in which elections are to be held.Such AGM or EGM shall not be delayed for more than 90 days from the due date of the meeting or such extended
time as may be allowed by the registrar, for reasons to be recorded, only in case of exceptional circumstances
beyond the control of the directors or in compliance of any order of the court

Question 11

direction by the registrar for election of direction if periode of ellction is expired

Answer 11

The registrar, may on expiry of period (for election), either:
a) on its own motion; or
b) on the representation of the members holding at least 10% of total voting powers in a company having
share capital; or
c) on the representation of the members holding at least 10% of total members of the company not having
share capital of the company,
directs the company to hold annual general meeting or extra-ordinary general meeting for the election of
directors on such date and time as may be specified in the order.

Question 12

Procedure for election of subsequent directors

Answer 12

1.Fixing the number of directors
2. Notice of contesting the election
3. Elected unopposed
4. Number of votes
5. Result of polling
6. All directors are equal
7. Procedure for company limited by guarantee not having share capital

Question 13

nominee director

Answer 13

nominated by Govt or body corportae

Question 14

criteria, proceedure and time limit of fresh ellection of director

Question 15

Powers of the court to declare election invalid

Answer 15

Appeal criteria
time limit
Decision of court

Question 16

Validity of acts of directors

Question 17

Casual vacancy

Question 18

Vacation of office

Question 19

removal of director

Question 20

fiduciary relationship

Answer 20

Directors have fiduciary relationship with the company. A fiduciary relationship is generally established only
when the confidence given by one person is accepted by the other person.
No director can hold office of a director if he is declared as lacking fiduciary behaviour by the court.

Question 21

Conscent to act as director

Answer 21

No person shall be appointed or nominated as a director or chief executive unless such person has given his
consent in writing to the company for such appointment or nomination. The company shall file such consent with
the registrar within 15 days of appointment or nomination

Question 22

Number of directorships

Answer 22

No person shall hold office as a director, including as an alternate director at the same time in more than such
number of companies as may be specified, however, this limit shall not include the directorships in a listed
subsidiary.