lecture-33 - LESSON 33: THE COMPANIES ACT, 1956 THE...

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LESSON 33: THE COMPANIES ACT, 1956 THE MANAGEMENT OF A COMPANY DIRECTORS AND MANAGING DIRECTORS Learning Objectives At the end of this chapter, you will be able to know about: · The meaning of directors and managing director · The position of directors and managing director · The appointment and removal of directors and managing director Introduction A company in the eyes of the law is an artificial person. It has no physical existence. As such it cannot act by itself and acts instead through human agency. The persons through whom it acts and by whom the business of the company is conducted are known as directors. The directors of a company are collectively known as the “ board of directors” or the “board” First of all, you must know what do we mean by director? Section 2(13) defines a director as any person occupying the position of a director, by whatever name he is called. It is the directors who exercise the powers of a company on the behalf of the company. Only individuals can be appointed as the directors of the company. No body corporate, association or firm shall be appointed as director of a company. The directors are the brain of a company. They occupy a pivotal position in the structure of the company. They are in fact the mainsprings of the company. Speaking about the importance of directors. Nevile J; observed in Bath v. Standard Land Co… [1910] 2CH. 408 that “ the Board of directors are the brain and the only brain of the company which is the body, and the company can and does act only through them.” It is only “ when the brain functions that the corporation is said to function.” Number of Directors Every public company (other than a deemed public company) must have at least three directors. Every other company must have at least two directors. Subject to this minimum number of directors, the articles of a company may fix the minimum and maximum number of directors for its board of directors. Right of company to increase or reduce the number of directors A company, at a general meeting may, by ordinary resolution, increase or reduce the number of its directors within the limits fixed in that behalf by its articles. Increase in number of directors to require Government sanction (Sec. 259) In the case of a public company, or a private company which is a subsidiary of a public company, any increase in the number of its directors, beyond the maximum number of directors permitted by the Articles of the Company as first registered, shall not have any effect unless approved by the Central Government and shall become void if, and in so far as, it is disapproved by that Government.
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Howe ver, where such permis sible maxi mum is 12 or less, no appro val of the Centra l Gover nment is requir ed provid ed the increa se does not increa se the numb er of direct ors beyon d 12. Let us
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lecture-33 - LESSON 33: THE COMPANIES ACT, 1956 THE...

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