COMPANY MANAGEMENT

Appointment of Directors
Removal of Directors

Shumeet K. Grewal
 A company being an artificial person cannot
act by himself
It must act through some human agency.
The persons by whom the business of
company is carried on are termed as directors.
It is the statutory requirement of every
company to have directors.
The directors collectively are referred to as
Board of Directors
Shumeet K. Grewal
 Only Individuals to be directors - No body
corporate association or firm shall be
appointed director of the company.
Executive and Non Executive directors
Executive directors are whole time employees of
company associated with day to day working and
receive remuneration
Non-Executive directors are not in employment of
company. Instead of remuneration they receive
sitting fee.

Shumeet K. Grewal
 Number of directors
Minimum -3 in case of Public Company and 2 in
case of Private Company
Maximum As fixed by Articles

Restriction on number of directorships

No person can be a director in more than 15
companies

Shumeet K. Grewal
 Appointment of Directors
Directors may be appointed in following ways
By the Articles
By Company at general meeting
By the principle of Proportional Representation
By the Board
By the third parties
By the Central Govt.
By the small shareholders
By the Tribunal in Sick Industries.
Shumeet K. Grewal
 By the Articles as regard first directors-
The first directors are usually named in Articles

Appointment of directors at general meeting-

Except the first directors the subsequent directors
are appointed by the company in general meeting
Not less than 2/3rd of the total number of
directors must be appointed by company in
general meeting.

Shumeet K. Grewal
 Appointment of directors by proportional
representation
Directors of a company are generally appointed by
simple majority
As a result majority shareholders controlling 51% or
more votes may elect all the directors

Appointment by directors- the directors are

empowered to appoint
Additional directors
Alternate directors
Directors filling casual vacancy

Shumeet K. Grewal
 Appointment by third party
Appointment by Central Govt.
Appointment by small shareholders-the
company may
At its option appoint small shareholders director
It may act on the notice of not less than 1/10th of
total number of small shareholders
Such notice shall be given 14 days before meeting
It must be signed by 100 small shareholders
Appointment of special director in case of sick
Industrial company

Shumeet K. Grewal
 Removal of directors
Director may be removed from his office
By the shareholders
By the Central Government
By the Tribunal

Shumeet K. Grewal
 Duties of directors
Fiduciary Duty
Duty of care and skill
Duty to attend Board meetings
Duty not to delegate
Duty to disclose interest
Statutory duties

Shumeet K. Grewal