The board of directors of the company is responsible for the management of the company and therefore, they are given wide powers to carry out the objectives of the company. However, the powers of the directors are governed by the provisions of the Companies Act, 2013 which erstwhile were covered under the Companies Act, 1956. The objective of this handbook is therefore, to lay down the duties, responsibilities and liabilities of directors in the light of the new Companies Act, 2013. Another objective of handbook is to apprise the directors of their responsibilities under other legislations vis-à-vis direct/indirect taxes, labour and employment as well environment. The handbook provides a brief snapshot of the responsibilities of director under various Indian legislations.
DUTIES AND RESPONSIBILITIES OF DIRECTORS
The Director must perform the following duties while carrying out the objectives of the company:
A. General Duties/Responsibilities
- To act within powers in accordance with the Articles of Association;
- To act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees and the shareholders;
- To exercise reasonable care, skill and diligence;
- To exercise independent judgment;
- To avoid conflict of interest;
- To avoid any undue gain or advantage either to himself or to his relatives, partners, or associates;
- He shall not assign his office.
B. Specific Duties
- To attend at least one board meeting held during a period of twelve months;
- To lay in the annual general meeting of the company, the financial statements of the financial year;
- To appoint the first auditor of the company;
- To disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, in the prescribed format in the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures already made;
- To intimate his Director Identification Number (DIN) to the company or all the companies wherein he is a director within one month of the receipt of such number;
- Every director should refund the excess sum which he received by way of remuneration to the company and until such sum is refunded, he should hold it in trust for the company;
- To produce all the documents and furnish all the statements, information and explanations in such form as may be required by the registrar for the conduct of inspection and enquiry;
- Where a proposal is there to wind up the company voluntarily, the majority of its directors should make a declaration at a Board meeting, verified by an affidavit to the effect that they have made a full enquiry into the affairs of the company and formed an opinion that the company has no debt or that it will be able to pay its debts in full from the proceeds of assets sold in voluntary winding up.