...It is widely accepted that the presence of independent directors in the boardroom improves the quality of corporate governance. Accordingly, corporate governance mechanisms all over the globe, including in India, focus on 'independent directors'. The Companies Bill 2011 includes number of new provisions related to independent directors. It includes a 'Code For Independent Directors' (Schedule IV). According to the Bill an independent director is a director other than a managing director or a whole-time director or a nominee director, who is not a promoter and who fulfils certain conditions specified in the Bill. Primarily he/she does not have any pecuniary relationship with the company or he/she, with relatives, does not hold more than two percent of the voting power of the company. The Bill describes an independent director as a person of integrity, who possesses relevant expertise and experience. The government expects independent directors to bring an independent judgment to bear on the Board's deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct; and to bring an objective view in the evaluation of the performance of board and management. As per the Companies Bill, their responsibility is to safeguard the interest of stakeholders, particularly minority shareholders and to balance conflicting interests of stakeholders. Balancing the conflicting interest is a tricky job and most experts believe that...
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...Lec 6: Ch 10 (the role of company directors and other officers and the means by which they are appointed and removed); main focus is on the directors * ‘officer’ and ‘director’ definition- s9, p200 (Morley v ASIC). * ‘director’- a) appointed director regardless of the name given to their position; b) not validly appointed director but acts in position or; c) not validly appointed but the directors of the company are accustomed to act in accordance with the person’s instructions and wishes; person in a) OR b) is de facto director, within c) is a shadow director * Statutory duties, including the duty to act with reasonable care and diligence and the duty to act in the best interests of the company * Statutory requirement for all companies to have at least one director; PTY company must have at least one, with one ordinarily residing in Australia (s201A(1)); public companies must have at least 3, with at least 2 in Aus (s201A(2)) * Directors’ role: manage or supervise the management; for companies that rely on the replaceable rules as their internal governance rules, s198A provides that “the business of a company is to be managed by or under the direction of the directors’” * Company secretary: public companies must have at least one company secretary (s204A(2)) be 18yo and have at least one residing in Aus; PTY company may have one but is not required to appoint one (s204A(1)); secretary is appointed by directors; responsibilities include record-keeping...
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...The role of a director of a company carries with it much legal responsibility This is the topic that will be discussed in this essay. It will begin with a definition of what a director is, followed by the relevant legislation. I will go on to discuss the different types of directors in a company followed by the main duties directors owe to a company. I have taken a look then at the powers directors have in a company and ended this topic with the personal and criminal accountability directors may experience if they don’t exercise their powers in good faith and in the interests of the company. Section 2(1) of the Companies Act 1963 defines ‘director’ as “including any person occupying the position of director by whatever name called.”(Keane 1991) The primary function of a director is to manage the company on behalf of the members. The Articles of Association usually provide for the delegation of the members’ management powers to the Board of Directors and many of the functions of the directors are set out in a company’s Articles of Association. (Abbott et al 1993) The relevant legislation that applies to companies and its directors is the Companies Act 1963. It states regulations for management of a company limited by shares not being a private company. (Callanan 2007) There are numerous types of company directors, Shadow Director, Alternative Directors, De Facto Directors, Executive Directors and Non Executive Directors. A shadow director is any person other...
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...topic Directors of Company While engaging ourselves in making this report, we gained useful information related to the procedures of election of directors and also find the eligibilty criteria for the election of directors other issue related to director of company. We have worked hard in making this report. We hope that it will fully serve its purpose. We appreciate your support in making this report and we also look forward to your feedback which will be helpful for us. Please check the enclosed report. Sincerely, Syed Abid Haider Mohammed Waqas Manzoor Encl. (1) LETTER OF ACKNOWLEDGEMENT All thanks to Almighty GOD, who is most merciful, who granted and helped us to work on this report. We would like to express our gratitude towards our parents for their kind co-operation and encouragement which helped us in completion of this report. We would also like to extend our gratitude towards our faculty Mr. Muhammad Zia Kayani, who gave us an opportunity to do a research and to make a report related to our course outline. We have made a report on Directors of Company Respectfully yours, Syed Abid Haider (12784) Mohammed Waqas Manzoor (12782) TABLE OF CONTENTS 1. LETTER OF TRANSMITTAL 1 2. LETTER OF ACKNOWLEDGEMENT 2 3. TABLE OF CONTENT 3 4. DEFINITION OF DIRECTOR 4 5. KINDS OF DIRECTORS 8 6. APPOINTMENT OF FIRST DIRECTOR 11 7. ELECTION OF DIRECTOR 14 8. METHOD OF VOTING 17 9. LOANS TO DIRECTORS 19 10. POWERS AND DUTIES OF DIRECTORS 23 11...
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...Introduction The welfare of a company depends on the shoulders of the directors and the directors are also responsible for the interests of the company as well as shareholders. Directors are basically fiduciary agents and they owe duties to the company, directors' are appointed by the company's shareholders to run the company's affairs for the benefits of the shareholders. Moreover, no company can get success without having the good and honest directors, so company success can only be achieved, if the directors of the company fulfil their duties and complete enforcement of the director's duties. Therefore directors play very significant role in any corporate governance system. Director's general duties are based on the certain common law rules and equitable principles. Lord Judge Bowen explains director's duties in these beautiful words that “directors are described sometimes as agents, sometimes as trustees and sometimes as managing partners. But each of this expression is to be used not as exhaustive of their powers and responsibilities, but indicating useful points of view from which they may for the moment and for the particular purpose be considered.” The Chapter 1 of this paper is amid to critically analyze that what are the duties and responsibilities of directors under Companies Act 2006. The duties of directors alone are of no importance if they cannot be fully enforced, the chapter 2 of this piece of work relates to the system of enforcement which provides the different...
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...Conclusion...............................................................................................................................10 References...............................................................................................................................10 Introduction Organizations can be considered as a system which consists of a numerous number of people who coordinate and work together to achieve the common goal. Organizational behavior is the set of actions performed by the individuals or the attitudes of the individuals in a particular organization. For a manager it is very essential to study and understand the organizational behavior as it will assist him to identify and correct problems, establish necessary changes etc. Management or managers plays a vital role in organizational behavior and in achieving its goals (R.L, M, and N, 2010). The role of managers is considered as the key factor in the success of the organization. However the success of an organization does not purely depend on the effectiveness of a manager but also on the interdependencies with other peoples in an organization’s operation. Manager’s interaction with the individuals who are involved in the process of goal achievement...
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...The liability protection provided to directors as a result of incorporation is referred to as the "corporate veil". However, there are exceptions to this general rule at Common law and under Statute law, which allow lifting the veil and making the directors liable for breach of their duties. For instance, there is a duty placed on directors by the Corporations Act 2001 to make sure their company does not trade while it is insolvent. A director has a duty to prevent the company from incurring a debt if the company is insolvent at the time the debt is incurred or becomes insolvent by incurring the debt, section 588 G of Corporations Act 2001. Section 588 G does not apply to officers other than directors. However, s. 9 of the CA defines a director as a person who is appointed to the position of a director or is appointed to the position of an alternate director and is acting in that capacity, regardless of the name that is given to his or her position. The definition is broad but it is clear that s. 588 G will be applicable to both shadow and de facto directors. It is also clear that s. 588 G of the CA is designed primarily to protect the interests of creditors because when company becomes insolvent, unsecured creditors might be unable to get their funds back. Determining whether a company is insolvent predominantly involves using a cash flow test, but must be determined by reference to the facts of each case. A number of factors that a reasonable person would take into account...
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...CMS_LawTax_CMYK_28-100.eps Duties & Responsibilities of Directors September 2012 With increased consolidation of business across Europe, executives of multinational groups can find that they are required to become directors of companies in a variety of jurisdictions, often at short notice. The rules relating to directorships vary considerably from jurisdiction to jurisdiction. This guide is intended to provide an overview of the duties and responsibilities of directors across 23 countries in Europe, answering the most frequently asked questions for directors coming from another jurisdiction. In many jurisdictions, there are various forms of company available, and there are different rules for directors according to the type of company used. This guide focuses for each jurisdiction on the most common form of company, and on the rules which apply to executive / managing directors. CMS is the organisation of independent European law and tax firms of choice for organisations based in, or looking to move into, Europe. CMS provides a deep local understanding of legal, tax and business issues and delivers client-focused services through a joint strategy executed locally across 28 countries with 52 offices in Western and Central Europe and beyond. CMS was established in 1999 and today comprises ten CMS firms, employing over 2,800 fee earners and is headquartered in Frankfurt, Germany. This guide is intended only to provide a general overview of the matters covered. It is based...
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...people manage all aspects of daily operations. Instead, there are people who hold important positions within the corporation. Many people work together in different areas with specific duties to perform in order to keep the operation running smoothly. Directors and Officers of Corporations The board of directors manages the corporation. “The Board of Directors sets a corporation’s policy and direction, and is empowered to elect and appoint officers and agents to act on behalf of the corporation, declare dividends, and act on other major matters affecting the corporation” ( Corporate Structure, 2012 ). The board of directors is made up of a group of directors. Those people can be appointed or elected. The group works together to make decisions within the corporation. They are responsible for the well-being of the corporation. While making these decisions, directors have to treat all the shareholders equally, being honest and fair while practicing good judgment in management. “The duty of care requires a director to act with the same care that a person in a similar position under similar circumstances” (Kim, 2010). Before making any decisions within a business, those in director positions should look at all the information and weigh the alternatives. In order to do this, the directors may have to research ideas in order to gather enough usable information needed to make an educated decision. Directors should also go through reports and attend meetings in order to keep up to...
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...Directors perform various duties within a company and these involve the coordination, leading, controlling and planning of a company’s resources so that set objectives and targeted are achieved. According to Abbort (1996), Directors are persons to whom the management of the company is entrusted. In Zimbabwe every company has the statutory obligation to have at least two directors of them one shall be a true ordinary resident of Zimbabwe; this requirement is according to the Companies Act (24:03) section 169(1). Some of the duties of directors are discussed below: To select competent executive officers It is the primary duty of a board of directors to select and appoint executive officers who are qualified to administer the company’s affairs effectively and soundly. It is also the responsibilities of the board of directors to dispense with the services of officers who prove to be unable to meet reasonable standards of executive ability and professionalism. A good example was portrayed by Econet PVT LTD directors who selected a highly educated directorate of executive officers with the likes of DouglasMboweni who is qualified and competent. To effectively supervise the company’s affairs The charter and degree of supervision required of an organization’s board of directors to assure a soundly managed organization involves reasonable business judgement and competent and sufficient time to become informed of the organization’s affairs. Directors cannot avoid responsibility for...
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...3 Body 4 Definition of directors 4 Definition of disqualified directors 4 Circumstances for disqualification of directors 5 i. Undischarged bankruptcy (section 125) 5 ii. Convicted of crimes (section 130) 5 ii. Disqualification in insolvent companies (section 130A) 6 Comparison of penalty or punishment of disqualified director under Malaysia’s Law and United Kingdom’s (UK) Law 6 Example of cases involve directors disqualification in UK and Malaysia 7 Case 1 7 Case 2 8 Conclusion 10 Abstract Director is one of the important people in the conducting of a company. Without them, the company cannot be operated and all matters concerning the company cannot be carried out. At present, when a company fall or declared bankruptcy, the director become a disqualified director and cannot be a director in other companies as they may cause a similar incident recurring. According to this matter, the punishment of the disqualified director in Malaysia is fixed to 5 years which in major or minor case and must pay a fine RM100, 000.00 or both. They can’t be a director of other company just because they fail to exercise their duties and caused they commit a major or minor cases in a long time period. This paper aim to examine whether the punishment of disqualified director can be implementing or change in Malaysia compare to other country. Introduction In Malaysia, the situation which the person who tend to be a disqualified director, the Court may make an order...
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...corporate directors and officers must be exercised with the due care while performing their duties. The standard or the meaning of due care has been described in several ways in judicial opinions and reduced in many corporation codes. In other words, a director or officer is expected actions to behave in the way of good faith, in order to exercise this method which is a person who shows care towards similar conditions, also must act towards the same case or conditions to be faithful and to consider or look attentively at the best interests towards the corporation . Duty to make informed and reasonable decisions making is another main duty for directors and officers. They are expected to be informed on corporate important matters, in order for the directors and officers to be informed. They must do or be involved within the corporation in every single matter, such as attend presentations, read reports, view others written materials such as contracts and ask for information from the people who has it (within the organization). In other words directors and officers must carefully study every situation and the situations possibilities before making or implementing a decision. Directors and officers are exposed to liability on many fronts. Corporate directors and officers maybe be held liable for the actions or omissions and a wrongful act or infringement of a right leading to legal liability under the supervision of the corporate or their employees. A corporate director or officer...
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...DIRECTOR OF A COMPANY: Section 252 provides that every public company must have at least 3 directors and every private company must have at least 2 directors. Subject to the minimum number of directors a company should have, the articles of a company may prescribe the maximum and the minimum number of directors for its board of directors. A company in a general meeting may by ordinary resolution increase or reduce the number of its directors within the limits fixed in that behalf by its article. A public company or a private company which is a subsidiary of a public company cannot increase the number of directors beyond the permissible maximum under its articles without the approval of the central government. However, no approval of the central government is required if such permissible maximum is twelve or less than twelve, and the increase in the number of its directors does not exceed twelve. Appointment of Directors : Director may be appointed in the following ways: 1. By the articles as regards first directors. 2. By the company in general meeting. 3. By the directors, 4. By third parties 5. By the principle of proportional representation 6. By the central government 1. First directors : The first directors are usually named in the articles. The articles may also provide that both the number and the names of the first directors shall be determined in writing by the subscribers to the memorandum or a majority of them. Where the articles are silent regarding the...
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...Director and Board of Directors: Directors are the persons who manage the affairs of the company. They are collectively known as the Board of Directors or Board. If we assume the company to be a body, the directors are its brain. The directors are the elected representatives of the shareholders. Managing director: According to Sec. 2(26) of Companies Act, 1956, "a managing director means a director who, by virtue of an agreement with the company or of a resolution passed by the company in a general meeting or by its board of directors or, by virtue of its Memorandum or Articles of Association, is entrusted with substantial powers of management, which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called." Shareholder and member: The word 'shareholder' is used in relation to a company having a share capital and there can be no membership except through the medium of shareholding. A holder of shares becomes a member only when his name is entered on the register of members. But the term 'member' is wider in scope and may be used in relation to all types of company. A person may become a member of a company without holding any share. Companies limited by guarantee or unlimited companies which may not have share capital, and therefore can have no shareholders but they do have members. 163 6.13 SELF ASSESSMENT QUESTIONS 1. "Members includes shareholder while shareholder does not...
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...Companies Act. Tuf Tan holds 45% of the shares in Happening Place Pte Ltd. Advise Tuf Tan and the directors as to the following: a. The directors appoint Payne Soh as the company’s public relations officer (ie an employee). Payne Soh has a personal conflict with Tuf Tan on one occasion. As a result, at a requisitioned meeting of the members Tuf Tan manages to get a resolution directing the directors to fire Payne Soh. The directors refuse to obey. Answer: The issues in question are whether the directors are entitled to disobey the decision of the member’s resolution to fire Payne Soh and what rights does Tuf Tan has after the refusal to proceed with the resolution. Under section 157A and Article 73 of Table A of the Fourth Schedule of the Companies Act (Cap. 50), the directors are conferred with the right to manage the business of the company under their direction. On the facts, the act of firing an employee, such as Payne Soh, is a management decision. Tuf Tan, as a member of the company, does not have managing rights and the power to enforce a decision on the directors. This is also supported by Automatic Self-Cleasing Filter Syndicate Co Ltd v Cunningham [1906] 2 Ch. 34 where the court stated that since the directors were conferred the power to determine such issues under the articles of the association, the members could not interfere. Therefore, the directors may sustain their decision of not firing Payne Soh in spite of the member’s resolution. On...
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