legal position of directors Essay Example

legal position of directors Essay LEGAL POSITION OF THE DIRECTORS OF THE COMPANY Mrs. Kamya Rani Mrs. Sukhbir Kaurl A company is an artificial person created by law. It functions through human agents who are collectively called Board of Directors. They are termed as Trustees of the assets of the company who sees that company business is carried on in accordance with the Memorandum and Articles of Association of the company. They decides policies of the company keeping in view the main objects for which the company was formed. Only an Individual is eligible for appointment as a Director of the company. There are various types of directors: 1 . Executive Directors i. e Managing Director, Whole time director 2. Non Executive Director Nominee Director Institutional Nominee Promotional Institutional Nominee Lending Institutional Nominee Holding company nominee Collaborator Nominee Government Nominee us. 48B Debenture holder Nominee Independent Director Others The individual cannot be a director for more than 15 public limited companies. The Directors of the company are custodians of the interest of the stakeholders which includes: (i) Employees Shareholders Creditors Customers Society It is not easy to explain the position that a director holds in a corporate enterprise. A director is not a servant of any master. He is the controller of the companys affairs. Director of a company is neither an employee nor a servant to the company. They are professional people who were hired by the company to direct its affairs. However there is no restriction under the Act, that a director cannot be an employee to the company. In Lee v. Lees Air Farming Ltd 1961 AC 12, it was held that, a director may, however, work as an employee in different capacity. We will write a custom essay sample on legal position of directors specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on legal position of directors specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on legal position of directors specifically for you FOR ONLY $16.38 $13.9/page Hire Writer There is no definite definition for irector under the Companies Act, 1956. Director includes any person who is occupying the position of a director, whatever name called. Director As Agents In Ferguson v. Wilson (1866) 2 Ch App 77, the court clearly recognised that directors are in the eyes of law, agents of the company. It was held that, the company has no person; it can act only through directors and the case is, as regards those directors, merely the ordinary case of a principal and agent. When the directors contract in the name, and on behalf of the company, it is the company which is liable on it and not the directors. In Elkington Co. v. Hurter 1892(2) CH 452, where the plaintiff supplied certain goods to a company tnrougn Its cnalrman, wno promlsea to Issue nlm a debenture for the price, but never did so and company went into liquidation, he was held not liable to the plaintiff. Similarly, a director was held to be personally not liable in a suit against a private chit fund company. Attachment of the property of the director was held to be not permissible. Like agents, directors have to disclose their personal interest, if any, in any transaction of the company. In Ray Cylinders Containers v. Hindustan General Industries Ltd(2001) 103 CC 161, held that, the directors are the agents of the institution and not of its individual members, except when that relationship arises due to the special facts of the case. Also granted permission to file a suit against a company was not allowed to be treated as permission against directors as well. In Sarathi Leasing Finance Ltd v. B Narayana Shetty(2006) 131 CC 798, the articles of association empowered the managing director to represent the company in legal proceedings. It was held that a further authorization was not necessary to enable im to file a complaint for dishonor of cheque under Sec. 138 of Negotiable Instrument Act. Directors are the agents of a company. They are acting on behalf of the company. So the directors cannot be held personally liable for any default of the company. It was held that, for a loan taken by a company, the directors, who had not given any personal guarantee to the creditor, could not be made liable merely because they were directors. Director As Trustees Directors are the trusties of the companys money, property and their powers and such must account for all the moneys over which they exercise control and shall efund any moneys improperly paid away, and shall exercise their powers honestly in the interest of the company and all the shareholders, and not their own sectional interest. To whom the directors are trustee? Whether to the company or to the individual shareholders. This principle was laid down in 1902 in Percival v. Wright, and still holds ground as a basic proposition. In this case the court held that, directors have no duty towards individual shareholders. From this it is very clear that, the directors are trustees to the company and not of individual shareholders. The principle of the case was reiterated in Peskin v. Anderson. Ordinarily the directors are not agents or trustees of members or shareholders and owe no fiduciary duties to them. However we have to take the decision of Allen v. Hyatt(1914) 30 TLR 444. It was held that, the directors are trustees of the profit for the benefit of the shareholders. They cannot always act under the impression that they owe no duty to the individual shareholders. But it is of no doubt that the primary duty of the director is to the company. Director As Organs Of Corporate Body The organic theory of corporate life treats certain officials as organs of the company, or whose action the company is held liable Just as a natural person is for the action of his limbs. Thus the modern directors are more than mere agents or trustees. The Board is also correctly recognised to be a primary organ of the company. Directors and managers represent the directing mind or will of the company and control what it does. The state of mind of these managers is the state of mind of the company and is treated by law as such. The practical effects of these rules are that the directors personal fault in the business of the company becomes the fault of the company; nelr reason to Delleve Is attrlDutea to tne company ana tne Intentlon to occupy a premises as expressed by their conduct is the intention of the company. CHANGES MADE BY THE NEW COMPANIES ACT, 2013 The 1956 Act prescribed minimum 2 directors for a private and 3 for a public company respectively to constitute a Board. This criterion has been retained by the new Act, but the maximum limit of directors on the Board has now been raised from 12 to 15. The Act has also removed the stringent compliance of securing prior Central Government approval for raising the number of directors beyond the prescribed limit nd, instead, a comparatively simpler method of approval by means of a special resolution of the shareholders has been introduced. Additionally, new changes include mandatory presence of independent directors on the Board of listed public companies and minimum one woman director in the case of certain class of companies to be notified later, thereby bringing more transparency and gender equality into the Board rooms. The legislation clearly defines the role of such independent directors and has a detailed Code for independent directors appended to it, which contains explicit guidelines for professional conduct, roles and esponsibilities of such directors. They are bound by this Code to play a role in the appointments, determination of remuneration and removal of executive directors, managers and key managerial personnel. In view of the fiduciary position held by directors, explicit provisions prescribing directors duties have been added to the new Act. These include keeping away from situations in which they have conflicting interest with that of the company, duty to make good in monetary terms any undue gain/advantage on the part of the directors etc. Independent directors: The provision o make companies have one-third of their board members as independent directors is fine in principle. Independent directors (IDs) are also more stringently defined, and their tenures will be limited to two terms adding up to 10 years. IDs can also hold a maximum of 20 directorships. The best thing about the new Companies Act is that it is simple, with greater clarity of intent and purpose. Sounds good? But there are pitfalls. For three reasons. First, how independent can IDs be when they are appointed and paid for by the promoters? Will promoters appoint truly independent people on boards? Second, are there enough persons available to be appointed as IDs? In theory, yes, because there are no qualifications for becoming an ID. But, in practice, once you tell the prospective person the responsibilities he will bear, the actual number of competent and willing IDs diminishes. Most IDs, in fact, end up adorning corporate boards without the time or commitment to work in the interests of shareholders. Third, if eligible IDs end up taking up 20 directorships each, how can they really serve each of those companies shareholders diligently? According to a CNBC TV18 report, AnalJit Singh of Max India, for example, attended only one out of 4 board meeting of Dabur in three years, before he resigned. How did he really help protect Daburs shareholder interests by remaining absent? The conclusion: it is good to have many IDs, but corporate governance will need a heavy dose of regulation too to complete the picture. Women directors: It is important for corporate boards to ensure gender diversity, but before that happens, a supply of women eligible for board positions needs to be created. According to GMI Ratings Women on Boards Survey 2013, even on the worlds best-known companies, women account for only 1 1 ercent 0T total alrectorsnlps. In Inala, a sample 0T BY companies witn more tnan S billion in market valuation, the women percentage is less than 7 percent. And we are talking only about the biggest companies here. Clearly, major efforts will have to be made to create more women directors, but before that there have to be more women reaching the top of the corporate hierarchy. The legislation should act as a spur to womens empowerment, but compliance could be years away. Refrences Company Law, Bangia Company Law, PranJape wmwmanupatra. com www. companylawreporter. com www. caclubindia. com

Free Essays on The Unternet

The Internet has revolutionized the computer and communications world like nothing before. The invention of the telegraph, telephone, radio, and computer set the stage for this unprecedented integration of capabilities. The Internet is at once a world-wide broadcasting capability, a mechanism for information dissemination, and a medium for collaboration and interaction between individuals and their computers without regard for geographic location. The Internet represents one of the most successful examples of the benefits of sustained investment and commitment to research and development of information infrastructure. Beginning with the early research in packet switching, the government, industry and academia have been partners in evolving and deploying this exciting new technology. Today, terms like "bleiner@computer.org" and "acm.org" trip lightly off the tongue of the random person on the street. 1 This is intended to be a brief, necessarily cursory and incomplete history. Much material currently exists about the Internet, covering history, technology, and usage. A trip to almost any bookstore will find shelves of material written about the Internet. 2 In this paper, 3 several of us involved in the development and evolution of the Internet share our views of its origins and history. This history revolves around four distinct aspects. There is the technological evolution that began with early research on packet switching and the ARPANET (and related technologies), and where current research continues to expand the horizons of the infrastructure along several dimensions, such as scale, performance, and higher level functionality. There is the operations and management aspect of a global and complex operational infrastructure. There is the social aspect, which resulted in a broad community of Internauts working together to create and evolve the technology. And there is the commercialization aspect, resulting in an ex... Free Essays on The Unternet Free Essays on The Unternet The Internet has revolutionized the computer and communications world like nothing before. The invention of the telegraph, telephone, radio, and computer set the stage for this unprecedented integration of capabilities. The Internet is at once a world-wide broadcasting capability, a mechanism for information dissemination, and a medium for collaboration and interaction between individuals and their computers without regard for geographic location. The Internet represents one of the most successful examples of the benefits of sustained investment and commitment to research and development of information infrastructure. Beginning with the early research in packet switching, the government, industry and academia have been partners in evolving and deploying this exciting new technology. Today, terms like "bleiner@computer.org" and "acm.org" trip lightly off the tongue of the random person on the street. 1 This is intended to be a brief, necessarily cursory and incomplete history. Much material currently exists about the Internet, covering history, technology, and usage. A trip to almost any bookstore will find shelves of material written about the Internet. 2 In this paper, 3 several of us involved in the development and evolution of the Internet share our views of its origins and history. This history revolves around four distinct aspects. There is the technological evolution that began with early research on packet switching and the ARPANET (and related technologies), and where current research continues to expand the horizons of the infrastructure along several dimensions, such as scale, performance, and higher level functionality. There is the operations and management aspect of a global and complex operational infrastructure. There is the social aspect, which resulted in a broad community of Internauts working together to create and evolve the technology. And there is the commercialization aspect, resulting in an ex...

Global Language Technologies Essay Example | Topics and Well Written Essays - 7500 words

Global Language Technologies - Essay Example This is a method that has been used by Dell Computer Corp. also. The third customer value offering is the product mix. GLT plans to offer all mobile communication devices, from cellular telephones to hand held devices and have accessories available. "Customer's who prefer one-stop shopping or variety would find such product mixes valuable" (Afuah and Tucci p 57 2000). 11 Global Language Technologies (GLT) is a fictitious company dealing with E retailing of multiple product lines emulating the mobile telecommunications industry through direct to consumer sales of mobile communication devices. Since the company deals with many and diverse products the inventory is huge both in terms of quantity as well as in terms of dollar value. The efforts are directed towards improving the supply chain process of the company by undertaking two major activities as follows: GLT needs a system that could integrate all these resources in order to utilise each one of them most optimally. GLT is medium sized organisation. In the telecommunications industry, information systems have a strong impact on management of the organization. The exchange of information through email, telephone, and Internet means that management has a secondary requirement other than people management, it must adapt to new technology as well as create base rules for the transfer of information. Furthermore, management has a responsibility to train employees on technology usage and security as information systems become more complex. Haag et al (p 9 2005) describes information as being: internal to the operation aspects of the facility; external, as the environmental impact of outside forces; objective as being known information; subjective as descriptions of the unknowns. The information systems, being where the telecommunications industry stores customer, business and technological knowledge, needs to be managed to the different types of information available. The influence of the