Company Management

Subjects to be covered
 BOARD OF DIRECTORS

 MANAGING DIRECTOR

 AUDITORS

 COMPANY SECRETARY
 Board of Directors
 Definition:
“any person occupying the position of a
director by whatever name called.” u/s 2(13)

 Only individuals to be directors u/s 253

 Legal position of directors

 Appointment
1. Appointment of First directors u/s254
2. Appointment at General Meeting u/s255
3. Appointment by Third Parties
4. Appointment by Central government
us/408

5. Appointment by the Board:

 As an additional director u/s 260
 To fill a casual vacancy u/s 262
 As an alternate director u/s 313
DIRECTORS:  RIGHTS:

 Minimum number of  Attend the meetings

directors
 Maximum number of  Participate in the
directors management
 Increase or decrease
in number  To receive
 Number of remuneration
directorships
 Duties
General duties: Statutory Duties:
 Not to issue irredeemable
 Duty of good faith
preference shares
 Duty of care redeemable after 10
 Duty not to delegate years
 Disclose interest

 Attend Board Meetings

 Convene General
Meetings
 Prepare report
 Powers
 General powers of board

 Exercised only at Board Meetings

 Requiring consent of Central Government

 Requiring unanimous voting

 Restrictions on powers
 Remuneration:
Director: Managing Director:
 1% of Net Profits  5% of Net Profits

 3% of Net Profits if  10% in case of 2 MDs

no MD

* Maximum remuneration should not

exceed 11% of Net Profit
 End to Directorship
 Disqualification
 Removal
 Retirement
 Vacation from office
 Resignation
 Removal
 Removal by shareholders
 Removal by central government
 Removal by law board
 MANAGING DIRECTOR OR
WHOLETIME DIRECTOR u/s 2(26)
Definition:
Managing Director means a director who by
virtue of an agreement with the company , or
of a resolution passed by the company in
general meeting or by its Board of Directors ,
or by the virtue of its memorandum or articles
of association , is entrusted with substantial
powers of management which would not
otherwise be exercisable by him.
A managing director may be appointed in any
of the following ways :
 by agreement with the company;
 by a resolution passed by the company
in general meeting;
 by a resolution passed by the Board of
Directors;
 by memorandum of associations;
 by articles of association.
 Appointment of managing director or whole-
time director: u/s 269, 268 & 317
 On and from 5.06.1988, every public company, or a private
company which is a subsidiary of a public company, having
paid-up share capital of rupees five crores or more, shall have
a managing or whole-time director.
 No appointment of a person as a managing or whole-time
director in a public company or a private company which is a
subsidiary of a public company shall be made except with the
approval of the Central Government unless such appointment
is made in accordance with the conditions specified in Parts 1
& 2 (subject to provision of Part 3) of Schedule 13 & a return
in the prescribed form is filled within ninety days from the date
of such appointment.
 Every application seeking approval to the appointment of a
managing or whole-time director or a manager shall be made
to the Central Government within a period of ninety days from
the date of such appointment.
 Company Law Board.
 Appointment Number of companies in which one
person may be appointed managing director: u/s 316
 A person can be appointed as a managing director or
manager of one or more company in the following
cases:
• such appointment or employment is approved by a
resolution passed at a meeting of the Board with the
consent of all the directors present at the meeting;
• specific notice of a meeting and resolution to be moved
thereat regarding the appointment of a managing director
of more than one company has been given to all the
directors then in India.
• The Central Government may, by order, permit any person
to be appointed as a managing director of more than two
companies, if the Central Government is satisfied that it is
necessary that the companies should, for their proper
working, function as a single unit and have a common
managing director.
 Powers of managing director or
whole-time director:
 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; or
 to draw and endorse any negotiable
instrument; or
 to sign any certificate of share; or
 to direct registration of transfer of any share.
Disqualification of a managing director
u/s 267

 No company shall appoint or employ or

continue the appointment of any person as a
managing or whole-time director who:
• is an undischarged insolvent, or has at any time
been adjudged an insolent;
• suspends or has at any time suspended payment
to his creditors, or makes, or has at any time
made a composition with them; or
• is or has at any time been convicted by Court of
an offence involving moral turpitude.
 Auditors
Who are auditors

Types of auditors

Qualifications of auditors – (S- 226)

 Appointment of auditors
 1st Auditor u/s 224(5)

 Subsequent auditors u/s 223(1)

 Through special resolution

 Who can not be appointed as
auditors
 A body corporate
 An officer or employee of the company
 A person who is the partner of the
company
 A person who is in debt to the copmay
exceeding to Rs. 1000/- or who has given
guarantee or provided any security
 Removal of auditors
 By passing a resolution in General meeting
 Rights of auditors
 To call for information & explanation
 To access books of accounts
 To attend meetings and to receive notices
 Inspection of articles other than books of
accounts
 Duties of auditors
 To scrutinize
 Loans & advances
 Entries
 Investment
 Expenses
 Company Secretary
 Definition –
“Secretary means a company secretary within
the meaning of clause (c) of sub-section (1) of
section 2 of the Company Secretaries Act, 1980
and includes any other individual possessing the
prescribed qualifications and appointed to
perform the duties which may be performed by
a secretary under this Act and any other
ministerial or administrative duties.”
 Qualifications
 Statutory Qualifications
Under two categories :
 Companies having a paid-up share capital of
Rs. 2 crores or more
 For other companies
 Qualifications Contd…
 Other qualifications :
 Sound general education
 Proficiency in language
 Wide knowledge
 Knowledge of company law
 Knowledge of other laws
 Knowledge of office organization and methods
 Knowledge of economics, banking and finance
 Good personality
Appointment of company secretary
 Compulsory appointment of a company
secretary u/s 383A
 Engaging Company Secretary in whole-
time practice by Companies Act 2000.
 What is the procedure of appointment?
Position of Company Secretary
 Recognized as a responsible officer of the
company under rule 2(b) of the Company Rules.
 Carries out the policy decisions of Board but for
routine day-to-day affairs, the secretary has the
authority to carry out the work.
 Acts as a link between the company and the
outside world.
 Enjoys a unique position in the management but
does not have managerial powers.
 Duties of Secretary
 General Duties
 Statutory Duties
 Duties under Income-tax Act
 Under the Indian Stamp Act
 Under other acts
 Rights of company secretary
 Right to control and supervise the working
of his department.
 Right to sign a document or proceeding.
 Right to be indemnified by the company
for any loss suffered by him.
 Right to receive remuneration.
 Dismissal of a company secretary
 May be removed from his office by a
resolution of Board of Directors.
 Can be dismissed without giving him a
notice in the following cases –
 For willful disobedience
 For misconduct or moral turpitude
 For negligence
 For incompetence or permanent disability
THANK YOU