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MANAGERIALPERSONNEL

Presented by:-

Neelima ThakurPallavi Suri

Neha Kapoor

Nitin Chaudhary

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Director

Acc to section 2(13) of the Companies Act 1956,

director in

cludes any person o

ccupying theposition of director by whatever name called.

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Definition

An individual who directs, controls, manages or

superintends the affairs of the company.The

directors of a company collectively are referred

to as Board of Directors or Board.

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Appointmentas directors

Appointment as first directors

Appointment by company

Appointment by third parties

Appointment proportional representation

Appointment by central government

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MANAGERIAL

REMUNERATIONThe remuneration payable to the directors is

determined by the articles of the company . The

managerial remuneration refers to remuneration

payable to:

a) managing directors

b) whole time directors

c) manager

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Maximummanagerialremuneration

A company may pay directors and manager inrespect of any financial year remuneration notexceeding level percent of its net profit of that

year

MinimumremunerationMinimumremuneration

According to Companies (Amendment)Act,1988prohibits payment of any sum by way of minimumremuneration where company has no profits

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Chartshowing overallpictureof

managerialremuneration

Categoriesof managerial personnelentitled toremuneration

Allthe directorswhen thereisamangerormanaging

directororwholetime director

Allthe directorswhenthereis nomanagerormanaging director

orwholetime director

Managing director(whenthereisonmanaging director)

Manager(thereisnoprovisionofhavingmorethanonemanager)

Wholetime directors (whenthereisonesuch director)

Managing directorsand wholetime directorstakentogether

Totalmanagerialremunerationto all directors,managing

director(s)ormanagerand / orwholetime director(s)

Max %ageofnetprofits

1%

3%

5%

5%

5%

10%

11%

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RegisterofDirectors

Section303provides that everycompany must keep at itsregistered office a register office of its directors, managing

directors, manager and secretary. The register shall contain:

1) Inthecaseofindividual- his present name and

surname in full,

his fathers name and surname in full,

his residential add. & his nationality,

his business occupation,

the particulars of any office held by him in any othercompany and the date of his birth.

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Inthecaseofbody corporate- its corporate name and

registered office,

the full name & address, nationality, the fathers name ofeach of its directors, and

if it holds the office of manager or secretary in any

other body corporate the particulars of each such office.

Inthecaseofafirm- the name of firm,

the full name, add., nationality, the fathers name or where

a partner is a married woman ,the husbands name of

each partner and the date on which each become a partner and

if the firm holds office in othercompanies the particulars

of each such office.

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MEETINGS OF THE BOARD OF

DIRECTORS

The provisions regarding board meetings are :

1) At least one meeting in every three months.

A meeting of the board of directors must be held at least

once in every 3 months.(Section 285)

2) Notice ofMeeting.

Notice of every meeting of Board of Directors must be

given in writing to every director for the time being in India,and at his usual address in India to every other director.

The Issue ofNotice to every director is mandatory.

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3) Quorum.

The minimum no. of directors which must be present tomake the proceedings of the Board valid.

Section 287 lays down that quorum for meetings of boardshall be:

i) One third of its strength

ii) 2 directors whichever is higher.

Disinterested quorum.

It must consist of directors who are entitled to vote on theparticular resolution before the Board.

Where at any time the no. of interested directors exceedor equal to two thirds of the total strength of directors, thenthe remaining disinterested directors present at meeting,not less than 2, shall be the quorum for the meeting.

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Exp. - Yand D,two directorshad madeadvancestocompany inconsiderationofreceiving debentures.The

company had 4 directors,3ofwhomwerea quorum. A

resolutionwaspassed grantinga debenturetoY. Y did not

voteonthisresolution. Anotherresolutionwaspassed

grantinga debenturetoDonwhichD did notvote.

Itwasheld that- 2 debenturesformed onetransactionin

whichYand Dwereequally interested and tht the2

resolutionswereinvalid forwantofquorum.(Re. North

Eastern InsuranceCo.ltd.(1919)2Ch.198)

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POWERS OF BOARD

A company being an artificial person, acts through its

directors. The powers which vest in board can beclassified as;-

1) General Powers

2)Specific Powers

3)Powerswhichcan beexercised withconsentof

shareholdersatmeetings.

1) Generalpowers(Section291)

Inspect the books of account ofcompany

Supervise the functions ofcompanys officers

Attend the meetings ofcompanys board of directors

Express his views on any resolution presented in meetings.

Oppose any resolution and make a dissenting note

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2) Specific powers (Section 292)

Power to make calls

Power to issue debentures

Power to borrow money otherwise than on debentures

Power to invest the funds of the company, to make loans

Power to appoint first auditors

Power to appoint additional directors

3)Powers exercisable with shareholders consent

Sell, lease or otherwise dispose off whole of undertakings of

company

Remit or give time for repayment of any debt due by director

Invest money in securities

Borrow money exceeding the aggregate paid up capital

Contribute to

charitable or other funds

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Exceptions. The powers of directors are subject to the control byshareholders at gen. meeting in the following cases:-

1) Directors acting malafide.

2) Board incompetent.

Exp. - The articles of the company authorised the board to fillcasual vacancies. Some casual vacancies occurred andfilled by shareholders in gen. meeting because at that time

there was no director validly in office. The appointmentwas challenged. It was held that appointment was valid.(Vishwanathan v. tiffins B.A. and P. LTD.AIR 1953 Mad.520)

3) Deadlock in the board.

Exp- There were only 2 directors on board of company & onerefused to act with another. Further they were unwilling toappoint additional directors under the power conferred onthem by articles. Thus there was deadlock. Theshareholders in gen. meeting appointed an additionaldirector. The appointment was held valid. (Barran v.

Potter(1974))

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DUTIES OF DIRECTORS

Dutiesofdirectorsmay be discussed under

followingheads:

1.Fiduciary duties,2.Duty forcare and skill,

3.Duty to attend board meetings,

4.Duty not to delegate,

5.Duty to disclose interest, and

6.Statutory duties.

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FIDUCIARY DUTIES: The director occupies a fiduciary

position and must therefore, exercise their power in good

faith and for the benefit of the company as the whole.

Directors should not enter into arrangements in whichthere is a possibility that the directors personal interest

could conflict with those of the company which they are

bound to protect.

DUTY OF CARE AND SKILL:A director must perform hisduties with reasonable care and skill i.e. with that amount

ofcare which an ordinary man will be expected to take, if

the business of the company was his own.

Eg: A director will be liable for negligence in the carrying

out of his duties, where the dividend was paid by directors

after the company traded only for eight months without

any investigation of companys trading position, such

payment was improper and directors must refund.

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DUTY TO ATTEND BOARD MEETING: A director should

attend the board meeting whenever he is able to do so, but

he is not bound to attend all board meetings.

Section 283(1)(g) provides that the office of director

becomes vacant if he absents himself from three

consecutive meetings of the board or from all meetings ofthe board, for a continuous period of three months,

whichever is longer, without obtaining leave of absent from

the board.

DUTY NOT TO DELEGATE: As a rule directors mustperform their duties personally and should not delegate

their office. The directors are bound by the maxim

delegatus nonpotest delegare.

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DUTY TO DISCLOSE INTEREST: as a director is an

agent of the company, he must see that his in interest andduty do not conflict. It follows that the company can avoid

a contract in which the director has an interest unless the

prior sanction of the board has been taken.

According to Companys Act(299), a director who is

interested in any transaction of the company, he is bound

to disclose his interest to the board.

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STATUTORY DUTIES:

1. These are enumerated below:

2. Duty not to allot shares until minimum subscription is raised.3. Duty to sigh the annual report and the certificate attached

thereto.

4. Duty to forward the statutory report to every member of the

company.

5. Duty to call an annual general meeting every year within

proper time.

6. Duty tocall an extraordinary general meeting on a validrequisition.

7. Duty to take a share qualification.

8. Duty to disclose shareholding.

9. Dut to submit a statement of affairs on windin u .

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Managing director:Section 2(26) defines a managing director as, "a director who, by virtue

of an Agreement with the company or a resolution passed by the

company in general Meeting or by its board of directors, or by virtue of

its memorandum or articles ofAssociation, 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.

Manager:As perSection2 (24)manager means as individual who, subject to

the Superintendence, control and direction of board of directors, has the

management Of the whole or substantially the whole, of the affairs of

the company and includes,Directors or any other person occupying the

position of a manager, by whatever name called and whether under a

contract of service or not.

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Managing director Whole-time director

The appointment of a managing director

need not necessarily be made with the

consent of the members.

The appointment of whole-time director

requires the sanction of shareholders, by

means of special resolution.

He can be appointed for a maximum period

of 5 years.

There is no such restriction.

He can be a managing director of 2 or more

companies.

He can not be a whole- time director of

more than 1 company.

He has substantial powers of management He is just an employee of the company

having powers as per the terms of

employment.

A managing director and a manager can not

exist simultaneously.

He can be appointed together with the

managing director or manager.

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Manager Managing director

He may not be a director He must be a director of the company

There can not be more than one manager of

the company

There may be more than one managing

director of the company

He may be appointed under a contract of

service or otherwise.

He may be appointed by virtue of

agreement or a resolution passed by a

company in general meeting,

Grounds of disqualification remains effectiveonly for 5 years.

Grounds for disqualification remains activefor whole life.

The central government may remove the

disqualifications

The central government has no such

powers.

He has powers more than a managingdirector has. He has just substantial powers ofmanagement.

His maximum remuneration may not exceed

5% of net profits.

The maximum limit is fixed at 10% of net

profits of all the managing directors.