DUTIES OF DIR

STATUTORY: Obligations imposed by co act:

1. To file return of allotments: within 30 days with the registrar. Failure makes dir. lia. as officer in default. Fine till the default continues. Irredeemable preference shares/redeemable after 20 yrs: not to be isued. If so fine. Dir held as officer in default. Disclose interest: a dir. in a meeting to the board must disclose his interest entering into contract with anyone.

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GENERAL: 1. 2. Duty of good faith: act in the interest of the co. Make no secret profits Duty of care: In performance of work assigned to him. 201 sec if articles or any agreement excludes liability of dir for negligence, default, breach, etc. The co. cannot indemnify him. But if acquitted then may. Duty not to delegate: The dir. Is bound by the maxim delegatus non potest delegare He is already a delegate hence cannot further delegate. Unless: articles permit, when he has regard for emergency of business then he may delegate to other officials of the co.

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LIABILITIES OF DIR
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LIABILITY TO THE CO.: If breach of fiduciary duty. Acting dishonestly Ultra vires act Ex. Paying dividends out of capital instead of profits. Dir liable. Negligence : reasonable care, skill in discharge of duties. But error of judgment not to be deemed negligence.
LIABILITY TO 3RD PARTIES:

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Liability of dir. under the co. act a. failure to state particulars b. mis statement of facts c. irregular allotment d. failure to repay application money (if min. subscription not received) e. failure to repay application money if application is not made for listing or refused by recognized stock exchange. f. if the 3rd parties liability is made unlimited by altering memorandum (passing spl. Resolution) g. in case of fraudulent trading

Liability for breach of warranty of authority a. must function within the scope of authority b. transaction is ultravires the co. or articles LIABILITY FOR BREACH OF STATUTORY DUTIES: LIABILITY FOR ACTS OF CO DIR: Only if there is contribution along with pother co dir. Else he is not. Only the other co dir are responsible.

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CRIMINAL LIABILITY: ex: if false statement in prospectus 2 yrs imprisonment