Duties of Directors

Directors are held responsible for the company’s compliance with the law. These duties are normally delegated to a company secretary, a director or a trusted employee of the company. It must be ensured that these responsibilities are being carried out.
● Abbreviated accounts of the responsibilities can be submitted by small to medium-sized companies in most of the cases.
● It is not mandatory for small-scale with a maximum turnover of INR 6.5 million and asset value of INR 3.26 million to audit their accounts and recruit auditors for their companies.
● It is no longer a matter of obligation to most of the private companies to conduct an Annual General Meeting every year.
● However, it is compulsory to hold an Annual General Meeting for a company if any director or at least five percent of the members of the company request to hold one.
● The section of the Amendment Act, 1996, states that it is forbidden for a company to issue irredeemable preference shares or preference shares redeemable beyond 20 years.
● Directors found responsible for any such issues are termed responsible for default and a fine of up to INR 10,000 may be imposed as a penalty.
● In case of a proposed contract, the required disclosure should be made at the board meeting.
● The decision of whether to enter the contract has to be taken in the board meetings.
● A director, who fails to comply with the requirements as to the disclosure of the contract, will be punishable with a fine, which may extend up to INR 50,000.
● For disclosure of receipt of a transfer of property, any money received by the directors from the transferee in the context of the transfer of the property inside the company, the property of undertaking must be disclosed.
● If the loss of office of a director of a company results due to transfer of any or all shares of a company, the director does not receive any compensation unless it is foresaid in a general meeting.
● A number of powers and duties can be exercised by the board of directors in board meetings.
● It is the duty of a director to attend board meetings.
● Board meetings should be held from time to time.
● If a director is unable to attend three consecutive board meetings or all the meetings for three months without the consent of the other board members, his office will fall vacant.