1. Introduction : Directors hold important place and various powers in the company. They should perform thier duties sincerly in the best interest of the company. If directors fail to perform their duties, they become legally liable.
2. Duties of Directors : For the efficient management of the company directors have to perform their duty as under.
(1) Directors have to act as per the provisions of Articles of Association of a company.
(2) A director of a company shall act in good faith in order to promote the objectives of the company for the benefits of shareholders.
(3) A director of a company shall act for the protection of shareholder, employees, society and environment.
(4) A director of a company shall exercise his duties with reasonable care, skill and diligence and shall take independent decisions.
(5) A director of a company shall not be directly or indirectly in a conflict of interest with the company.
(6) Directors must attend every meeting of the Board of Directors. If it is not possible, he must inform well in advance.
(7) A director must not make any personal and secret profit.
(8) Directors must take due care of financial matters, movable and immovable assets of the company. They should not use company’s property for their personal benefits.
(9) Directors must invest company’s fund properly and very carefully.
(10) Directors must call a meeting of the Board of Directors at least once in every 3 months.
(11) A directorof a company shall not attempt to achieve any undue advantage for himself or for his relatives, partners or associates. If he is found guilty of making any undue gain he shall be liable to pay double amount of that gain to the company.
(12) A director of a company shall not assign his office to another. Such assignment shall be considered void.
(13) If a director of the company does not abide with the provisions he shall be punishable with minimum one lakh rupees extendable to five lakhs.
(14) It is the duty of every Board of Director to constitute an Audit Committee.
(15) The Board of Director has to constitute a stakeholders relationship committee.
(16) A director of a company cannot acquire assets for consideration. He can only accept cash! cheque.
(17) Directors of a company cannot enter into insider trading.