By: Nimisha Sinha

Company Management

A company is an artificial person and it acts through directors. Directors are collectively known
as the Board of Directors. The management of the affairs of the company is vested in the Board
of Directors. The Board of Directors of the Company are said to be the nucleus, they are
selected according to the procedure prescribed in the Companies Act, 2013 and Articles of
Association of the company. Members of the Board of Directors are known as Directors.

Directors

The directors are the living beings through which the company, an artificial legal entity
conducts its business. As you may have learned in contracts, when a person enters into contracts
and does business on another person’s behalf, he is called an agent; an agent of the principal.
In this case, the company is the principal and the directors are agents of the company. It is an
important distinction to realize that the directors are not each other’s agents but the agents of
the company.

Directors Appointment

Appointment of Directors under Companies Act 2013 - Section 152

Generally, in a public company or a private company subsidiary of a public company,

two-thirds of the total numbers of Directors are appointed by the shareholders and the
remaining one-third’s appointment is made as per Articles and failing which,
shareholders shall appoint the remaining one-third.
In a private company, which is not a subsidiary of a public company, the Articles can
prescribe the manner of appointment of any or all the Directors. In case the Articles are
silent, the Directors must be appointed by the shareholders.

General provisions relating to the appointment of directors

Every director should be appointed by the company in general meeting as per the
provision of the Act.
Director Identification Number is compulsory for appointment of director of a
company.
Every person proposed to be appointed as a director shall furnish his Director
Identification Number and a declaration that he is not disqualified to become a director
under the Act.
A person appointed as a director should give his consent to hold the office of director
in physical form on or before his appointment i.e., Consent to act as a director of a
company.
Company should file Form with the Registrar of Companies mentioning particulars of
appointment of directors and Key Managerial Persons along with the Consent form
signed by Directors, as an attachment within 30 days of the appointment of a director
with necessary fee.
 Articles of the Company may provide the provisions relating to retirement of the all
directors. If such provision relating to retirement are not made in the articles. Provision
in the Act will be applicable.

Duties of Director

Directors act as agents of the shareholders and act as a trustees of shareholders. Thus they have
a fiduciary duty to protect the property of the company. Simply stated the following are the
duties of Directors:

Structuring or new policy to reach the objectives of a company.

Delegating power to any committee if the Articles Permits for well being of the company
Issuing instructions to employees for implementation of policy to review company's
progress.
Appointing their subordinates like Managing director, Manager, Secretary and other
employees.
Acting in accordance with the Articles of the company
Act in Good faith in order to promote the objects of the company
Perform duties with due and reasonable care and diligence.

Managing Director

‘Managing Director’ means a director who by virtue of the articles of a company or an

agreement with the company or a resolution passed in its general meeting, or by its
Board of Directors, is entrusted with substantial powers of management of the affairs
of the company and includes a director occupying the position of managing director, by
whatever name called.
The Act also states that substantial powers of the managing director do not include the
power to do administrative acts that are of a routine nature authorised by the board,
such as the following:

Power to affix the company’s common seal on any document.

Draw and endorse cheque on the company’s account in any bank.
Draw and endorse a negotiable instrument.
Sign any share certificate.
Direct registration of transfer of a share.

MANAGING DIRECTOR

Power: Managing Director is entrusted with substantial powers.

Prohibition: Section 197 Prohibits to act both a managing director and a manager
simultaneously.
Appointment: Consent of the shareholders of the company by means of resolution is
not necessarily for the appointment of managing director
Duration of Appointment: No individual can be appointed for more than five years at
a time.
Board of Directors

The Governing body of a Company incorporated under Companies Act called Board. It is a
group of individuals called directors, elected to represent the views of shareholders of a public
limited company and to manage the company affairs by establishing policies and implementing
them to achieve the goal. They are empowered to take decisions on the major issues to lead the
company in the right way. In General, the Board is empowered to:

Set the Policies

Restructure the objectives
Evaluate the performance of Managing Director and Senior Executives.
Exercise overall Direction
Adopt bylaws
Determine and pay the dividend
Issue additional shares.
In General, the Board is responsible for assisting the company in setting broad goals,
supporting the management, ensuring the adequate resources available in the
company and its utilisation.

Board Meeting

A Board Meeting is a formal meeting of the board of directors of an organization and any
invited guests, held at definite intervals and as needed to review performance, consider policy
issues, address major problems and perform the legal business of the board. Presided over by
a chairperson of the organization, the quorum, rules, and responsibilities for board meetings
will be documented in the organization's operating agreements and may need to meet
government requirements. The finalized and approved record for a board meeting is called the
minutes, a legal document published according to the rules governing that board's operations.

Statutory Board

Statutory Board means a Board, committee or other group which is under any statute
Responsible for the direction, governing or control of any entity other than a Ministry
or department of Government and a majority of the membership of which Board,
committee or other group would under any Act be constituted by persons to be
appointed to that Board, committee or other group by a Minister or public officer and
by Ministers and public officers who are ex officio members of that Board, committee
or other group.
Statutory Board means a body corporate or unincorporate established by or under any
public Act to perform or discharge a public function;
Annual General Meeting (AGM) vs. Extraordinary General Meeting (EGM)

An AGM must be held by the company within nine months of the end of every financial
year to discuss various business matters with the members, while an EGM has no such
requirement.
An EGM can be called only for a special agenda or a situation of crisis requiring urgent
attention of the members, while an AGM can be called for ordinary or special business.
An EGM can be held at a national holiday and outside of business hours, which is not
the case with an AGM.
An AGM can only be convened by the board of directors of a company, while an EGM
can additionally be called on the request of the members as detailed above.