SUDHIR KOCHHAR CLASSES- COMPANY LAW-DIRECTORS Concept of Director A company in the eyes of the law is an artificial person.

It has no physical existence. It has neither soul nor a body of its own. As such, it cannot act in its own person. The directors are the brain of a company. They occupy a pivotal position in the structure of the company. They are in fact the mainspring of the company. 1. What do you mean by Director? Ans: Definition
Section 2(13) of the Companies Act, 1956, Director includes any person occupying the position of director, by whatever name called. The important factor to determine whether a person is or not a director is to refer to the nature of the office and its duties. Thus a director may be defined as a person having control over the direction, conduct, management or superintendence of the affairs of the company. This definition is based purely on the functions of director. Accordingly, a person is a director if he performs the normal functions of a company director. The Act provides no further guidance on this score. There are 2 types of directors: full tie directors and part time directors. Full time directors are full time employees of the company and are variously designated as managing director, whole-time directors, executive director, technical director. Etc. Part Time Directors who are professionals, for their livelihood, do not depend one company; but serve on the Board of Directors of a large number of companies.

Only individuals can be directors- No body corporate, association or firm can be appointed director of a company. Only an individual can be so appointed. Section-253
The supreme executive authority controlling the management and affairs of a company vests in the team of directors of the company, collectively known as its Board of Directors. Although the Board comprises individual directors, yet the actions and deeds of directors individually functioning cannot bind the company, unless a particular director has been specifically authorised by a Board resolution to discharge certain responsibilities on behalf of the company. Despite the importance of the office of director in a company, the Companies Act, 1956 does not contain an exhaustive definition of the term director. Section 2(13) of the Act contains an inclusive definition of the term director includes any person occupying the position of director, by whatever name called. In view of the foregoing, the term directors may be defined as individuals who, collectively as a team, known as the Board of Directors of the company, direct, control and manage the business and affairs of the company. A director is a person appointed to perform the duties and functions of director of a company in accordance with the provisions of the Companies Act, 1956. A person may be a deemed director, if he occupies the position of director of a company, irrespective of his designation.

COMPANY LAW-PROFESSIONAL STUDIES, ICSI, ICAI, ICWA, MBA.

SUDHIR KOCHHAR CLASSES- COMPANY LAW-DIRECTORS

Maximum/Minimum Number of Directors in a Company

Section 252 Minimum No. of directors

PUBLIC COMPANY

Company Having share Capital 5 crores and atleast 1000 small shareholders (SS)- Atleast 3 Directors and one of the directors may be representative of small shareholder. Others- Atleast 3 Directors

OTHER COMPANIES (Including Private Companies) Atleast 2 Directors Every public company is required to have a minimum of three directors. Every other company is required to have at least two directors Small shareholders may elect one among themselves shareholders directors in such manner as may be prescribed. to be small

Small shareholders means shareholder holding shares the nominal value of which do not exceed Rs.20,000. As per Section 581O of the Act, every Producer company must have at five directors and not more than fifteen directors. However where an State Co-operative Society is incorporated as Producer company, company may have more than fifteen directors for a period of one year the date of its incorporation as Producer company. least inter such from

2. State the provisions of the companies Act, 1956 relating to the minimum and maximum number of directors that a company can have. How can the number of Directors may be increased or reduced? Ans:
The maximum number of directors of a public company are provided in its articles of association. In order to increase or reduce the number of its directors, the company is required to pass an ordinary resolution in general meeting but such increase must be within the limits fixed in that behalf by its articles (Section 258). Any increase in the number of directors beyond twelve requires approval of the Central Government. If the Central Government does not approve the increase, such increase beyond twelve shall not have any effect (Section 259).

COMPANY LAW-PROFESSIONAL STUDIES, ICSI, ICAI, ICWA, MBA.