DIRECTORS IN COMPANY LAW (INDIA)

TANMOY MUKHERJI INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherji

Advocate

DIRECTORS IN COMPANY LAW (INDIA)-

Tanmoy Mukherji

Advocate

Under the Companies Act, 2013, directors are the persons entrusted with the management and control of a company. Since a company is an artificial legal person, it can act only through human agency — that agency is the Board of Directors.

Section 2(34) defines a director as a person appointed to the Board, and Section 2(10) defines the Board of Directors as the collective body of directors.

1.Legal Position of Directors-

Directors occupy a unique and multi-faceted position in company law.

(A) Directors as Agents

Directors act as agents of the company. The company (principal) is bound by acts of directors (agents) performed within their authority.

Reference Case

(B) Directors as Trustees

Reference Case

C) Directors as Officers-

Under the Companies Act, directors are treated as “officers in default” and may incur civil and criminal liability.

2. Types of Directors-

Under the Companies Act, 2013:

→Executive Director

→Non-Executive Director

→Independent Director (Sec 149(6))

→Woman Director (mandatory for prescribed companies)

→Nominee Director

→Additional Director (Sec 161)

→Alternate Director

→Small Shareholders’ Director

Reference Case

3. Appointment of Directors-

→Minimum Number (Sec 149)

→Public Company – 3

→Private Company – 2

→OPC – 1

Reference Case

4. Qualification & Disqualification-

Reference Case

5. Powers of Directors-

Under Section 179, the Board may exercise all powers except those reserved for shareholders.

Examples:

→Borrow money

→Issue shares

→Invest funds

→Approve financial statements

Reference Case

6. Duties of Directors (Section 166)

Statutory duties include:

Reference Case

7. Liabilities of Directors

(A) Civil Liability-

→Breach of fiduciary duty

→Misfeasance

→Negligence

Reference Case

(B) Criminal Liability

→Fraud (Sec 447)

→False statements

→Non-compliance with statutory provisions

(C) Personal Liability

→Ultra vires acts

→Fraudulent conduct

8. Removal & Resignation-

Reference Case

→Resignation (Sec 168)

→Written notice

→ROC filing mandatory

9. Collective Responsibility of Board-

→The Board acts collectively. Individual directors are not usually liable unless:

→They participated in wrongful act

→They were negligent

Reference Case

10. Corporate Governance & Independent Directors

→Independent Directors ensure transparency, accountability, and minority protection.

→Their role became significant after corporate scams and governance reforms.

→Directors are the brain, will, and controlling authority of the company. They occupy a fiduciary position combining agency and trusteeship. Their powers are wide but not absolute.

Failure to comply results in civil and criminal liability under the Companies Act, 2013.