Types of Directors

Executive Directors Non- Executive Directors Nominee Directors Representative Directors Alternative Directors Shadow Directors Associate Directors

Types of Board Structures

All Executive Board Majority Executive Board Majority Outside Board Two tier Supervisory Board (Non-executive supervisory board & the executive management board)

Issues in Designing a Board

The Board size The role of the chairman and the Chief Executive Duality in subsidiary company board

Board Styles
Rubber stamp boards Representative boards Country club boards Professional boards

Roles and Responsibilities of Board of Directors

Definition :-Sec.2(13) A person having the control over the direction, conduct , management or superintendence of the affairs of the company. Only individuals can be directors - sec.253 DIN

Directors
Number of Directors Increase or reduction in number of directors (Articles) Sanction by the central government.

Directors
First director Sec. 254 & Clause 64 Appointment of directors by the company/ appointment of directors by proportional representation Appointment of directors by directors As additional directors Casual vacancy

Directors
Advisory directors Alternate directors Appointment by third parties Appointment by central government Specialist directors (out-side directors)

Role of Directors
 As agents, trustees and managing partners Directors as an agent Directors as employees Directors as officers Directors as trustees Alexander V/S Automatic telephone co. (all the shares ) Piercy V/S S. Mills & Co. Ltd. (issued the un issued shares of the company)

Role of Directors
Performance role Conformance role

Responsibilities /Duties of Directors

Number of directorships - Secs.275, 277 to 279. not more than 15 companies. Qualifications an individual, competent to contract and hold a share qualification if so required by the articles. Managerial remuneration Sec. 198

Duties/Responsibilities of the Directors

Meetings of the directors Responsibility of the director make calls on shareholders, issue debentures, invest the funds of the company and make loans. Fiduciary duties Duties of care skill and diligence

Responsibilities /Duties of Directors

Standard of care - city equitable fire insurance co. case (management left in the hands of MD) Not to delegate his functions To disclose his interests and not to make secrete profits Maintain confidentiality Protect interests of the creditors

Liabilities of Directors
Misrepresentation in offer documents and annual accounts Failure to return subscription money to investors Contravention of the law.

The Role of the Chairman

The role of the chairman is to manage the board and ensure that its policies are put into practice by the management. To work closely with company secretary To address legal issues.

The Role of the Chairman

Must have a good understanding of the financial standing of the company. To keep a strict watch on the actual performance of the company.  should assess where the company stands And where it is heading. Must identify shortcomings

The Role of the Chairman

 To cater to the internal needs of the Board Relationship with CEO Relationship with executive & non-executive directors

Functions of the Chairman

To act as a representative of the company To act decisively in times of crisis To set standards to ensure that the policies and practices are in place

Functions of the Chairman

To ensure that the directors make good decisions To make sure that the directors are continuously upgraded to the levels required by investors to meet the current and future needs of the company.

The Role of CEO

The primary role of the CEO is to run the organization in an efficient manner to produce the desired result. Should have constructive relationship with the chairman and the directors.

Functions of the CEO

Formulating strategic proposals Provides leadership Develops a plan Representative of executive directors

Functions of the CEO

Present the company

Source of inspiration Identify situations that require intervention