legal position of directors Essay Example

legal position of directors Essay LEGAL POSITION OF THE DIRECTORS OF THE COMPANY Mrs. Kamya Rani Mrs. Sukhbir Kaurl A company is an artificial person created by law. It functions through human agents who are collectively called Board of Directors. They are termed as Trustees of the assets of the company who sees that company business is carried on in accordance with the Memorandum and Articles of Association of the company. They decides policies of the company keeping in view the main objects for which the company was formed. Only an Individual is eligible for appointment as a Director of the company. There are various types of directors: 1 . Executive Directors i. e Managing Director, Whole time director 2. Non Executive Director Nominee Director Institutional Nominee Promotional Institutional Nominee Lending Institutional Nominee Holding company nominee Collaborator Nominee Government Nominee us. 48B Debenture holder Nominee Independent Director Others The individual cannot be a director for more than 15 public limited companies. The Directors of the company are custodians of the interest of the stakeholders which includes: (i) Employees Shareholders Creditors Customers Society It is not easy to explain the position that a director holds in a corporate enterprise. A director is not a servant of any master. He is the controller of the companys affairs. Director of a company is neither an employee nor a servant to the company. They are professional people who were hired by the company to direct its affairs. However there is no restriction under the Act, that a director cannot be an employee to the company. In Lee v. Lees Air Farming Ltd 1961 AC 12, it was held that, a director may, however, work as an employee in different capacity. We will write a custom essay sample on legal position of directors specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on legal position of directors specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on legal position of directors specifically for you FOR ONLY $16.38 $13.9/page Hire Writer There is no definite definition for irector under the Companies Act, 1956. Director includes any person who is occupying the position of a director, whatever name called. Director As Agents In Ferguson v. Wilson (1866) 2 Ch App 77, the court clearly recognised that directors are in the eyes of law, agents of the company. It was held that, the company has no person; it can act only through directors and the case is, as regards those directors, merely the ordinary case of a principal and agent. When the directors contract in the name, and on behalf of the company, it is the company which is liable on it and not the directors. In Elkington Co. v. Hurter 1892(2) CH 452, where the plaintiff supplied certain goods to a company tnrougn Its cnalrman, wno promlsea to Issue nlm a debenture for the price, but never did so and company went into liquidation, he was held not liable to the plaintiff. Similarly, a director was held to be personally not liable in a suit against a private chit fund company. Attachment of the property of the director was held to be not permissible. Like agents, directors have to disclose their personal interest, if any, in any transaction of the company. In Ray Cylinders Containers v. Hindustan General Industries Ltd(2001) 103 CC 161, held that, the directors are the agents of the institution and not of its individual members, except when that relationship arises due to the special facts of the case. Also granted permission to file a suit against a company was not allowed to be treated as permission against directors as well. In Sarathi Leasing Finance Ltd v. B Narayana Shetty(2006) 131 CC 798, the articles of association empowered the managing director to represent the company in legal proceedings. It was held that a further authorization was not necessary to enable im to file a complaint for dishonor of cheque under Sec. 138 of Negotiable Instrument Act. Directors are the agents of a company. They are acting on behalf of the company. So the directors cannot be held personally liable for any default of the company. It was held that, for a loan taken by a company, the directors, who had not given any personal guarantee to the creditor, could not be made liable merely because they were directors. Director As Trustees Directors are the trusties of the companys money, property and their powers and such must account for all the moneys over which they exercise control and shall efund any moneys improperly paid away, and shall exercise their powers honestly in the interest of the company and all the shareholders, and not their own sectional interest. To whom the directors are trustee? Whether to the company or to the individual shareholders. This principle was laid down in 1902 in Percival v. Wright, and still holds ground as a basic proposition. In this case the court held that, directors have no duty towards individual shareholders. From this it is very clear that, the directors are trustees to the company and not of individual shareholders. The principle of the case was reiterated in Peskin v. Anderson. Ordinarily the directors are not agents or trustees of members or shareholders and owe no fiduciary duties to them. However we have to take the decision of Allen v. Hyatt(1914) 30 TLR 444. It was held that, the directors are trustees of the profit for the benefit of the shareholders. They cannot always act under the impression that they owe no duty to the individual shareholders. But it is of no doubt that the primary duty of the director is to the company. Director As Organs Of Corporate Body The organic theory of corporate life treats certain officials as organs of the company, or whose action the company is held liable Just as a natural person is for the action of his limbs. Thus the modern directors are more than mere agents or trustees. The Board is also correctly recognised to be a primary organ of the company. Directors and managers represent the directing mind or will of the company and control what it does. The state of mind of these managers is the state of mind of the company and is treated by law as such. The practical effects of these rules are that the directors personal fault in the business of the company becomes the fault of the company; nelr reason to Delleve Is attrlDutea to tne company ana tne Intentlon to occupy a premises as expressed by their conduct is the intention of the company. CHANGES MADE BY THE NEW COMPANIES ACT, 2013 The 1956 Act prescribed minimum 2 directors for a private and 3 for a public company respectively to constitute a Board. This criterion has been retained by the new Act, but the maximum limit of directors on the Board has now been raised from 12 to 15. The Act has also removed the stringent compliance of securing prior Central Government approval for raising the number of directors beyond the prescribed limit nd, instead, a comparatively simpler method of approval by means of a special resolution of the shareholders has been introduced. Additionally, new changes include mandatory presence of independent directors on the Board of listed public companies and minimum one woman director in the case of certain class of companies to be notified later, thereby bringing more transparency and gender equality into the Board rooms. The legislation clearly defines the role of such independent directors and has a detailed Code for independent directors appended to it, which contains explicit guidelines for professional conduct, roles and esponsibilities of such directors. They are bound by this Code to play a role in the appointments, determination of remuneration and removal of executive directors, managers and key managerial personnel. In view of the fiduciary position held by directors, explicit provisions prescribing directors duties have been added to the new Act. These include keeping away from situations in which they have conflicting interest with that of the company, duty to make good in monetary terms any undue gain/advantage on the part of the directors etc. Independent directors: The provision o make companies have one-third of their board members as independent directors is fine in principle. Independent directors (IDs) are also more stringently defined, and their tenures will be limited to two terms adding up to 10 years. IDs can also hold a maximum of 20 directorships. The best thing about the new Companies Act is that it is simple, with greater clarity of intent and purpose. Sounds good? But there are pitfalls. For three reasons. First, how independent can IDs be when they are appointed and paid for by the promoters? Will promoters appoint truly independent people on boards? Second, are there enough persons available to be appointed as IDs? In theory, yes, because there are no qualifications for becoming an ID. But, in practice, once you tell the prospective person the responsibilities he will bear, the actual number of competent and willing IDs diminishes. Most IDs, in fact, end up adorning corporate boards without the time or commitment to work in the interests of shareholders. Third, if eligible IDs end up taking up 20 directorships each, how can they really serve each of those companies shareholders diligently? According to a CNBC TV18 report, AnalJit Singh of Max India, for example, attended only one out of 4 board meeting of Dabur in three years, before he resigned. How did he really help protect Daburs shareholder interests by remaining absent? The conclusion: it is good to have many IDs, but corporate governance will need a heavy dose of regulation too to complete the picture. Women directors: It is important for corporate boards to ensure gender diversity, but before that happens, a supply of women eligible for board positions needs to be created. According to GMI Ratings Women on Boards Survey 2013, even on the worlds best-known companies, women account for only 1 1 ercent 0T total alrectorsnlps. In Inala, a sample 0T BY companies witn more tnan S billion in market valuation, the women percentage is less than 7 percent. And we are talking only about the biggest companies here. Clearly, major efforts will have to be made to create more women directors, but before that there have to be more women reaching the top of the corporate hierarchy. The legislation should act as a spur to womens empowerment, but compliance could be years away. Refrences Company Law, Bangia Company Law, PranJape wmwmanupatra. com www. companylawreporter. com www. caclubindia. com

KLEIN Surname Meaning and Family History

KLEIN Surname Meaning and Family History Similar to the English surname Little, Klein is  a  descriptive surname often bestowed on someone of short or petite stature. The name derives from  the German klein or Yiddish kleyn, meaning little. The klein root is also  often found used as a surname to distinguish a younger man of the same name, usually a son, in names such as Kleinhans and Kleinpeter. Alternate Surname Spellings:  CLEIN, CLINE, KLINE, KLEINE Surname Origin: German, Dutch Where is the KLEINSurname Most Common? According to surname distribution data from Forebears, Klein is a very  common surname in Germany where it ranks as the countrys 11th most popular surname. It is also common in Israel, where it ranks 23rd and the Netherlands, where it ranks 36th.   WorldNames PublicProfiler  indicates that within Germany, Klein is  most common in Saarland, followed by Rheinland-Pfalz. Its also very common in the Germany-bordering regions of France, including Alsace and Lorraine. Surname maps from Verwandt.de indicate that the Klein surname is present in the largest numbers in western Germany, in places such as Kà ¶ln, Rhein-Sieg-Kreis, Saarlouis, Stadtverband Saarbrà ¼cken, Siegen-Wittgenstein, Rhein-Erft-Kreis, and Oberbergischer Kreis, as well as in the cities of Berlin, Hamburg and Munich.   Famous People with the KLEIN Last Name Yves Klein - French painter and sculptorLawrence Klein  - American economistCalvin Klein  - American fashion designerJacob Theodor Klein  - German botanist, zoologist and politicianEmanuel Edward Klein - Croatian-born bacteriologist Genealogy Resources for the Surname KLEIN Little/Klein/Cline/Kline Y-Chromosome ProjectThis DNA project includes over 85 members with the surnames Little, Klein, Kline, or Cline interested in working collaboratively to combine genealogy research with DNA testing to sort out Little family lines. German Surname Meanings and OriginsUncover the meaning of your German last name with this guide to surname meanings and origins from Germany. How to Research German  AncestryLearn how to research your German family tree with this guide to genealogical records in Germany, including birth, marriage, death, census, military and church records. Klein Family Crest - Its Not What You ThinkContrary to what you may hear, there is no such thing as a Klein  family crest or coat of arms for the Klein surname.  Coats of arms are granted to individuals, not families, and may rightfully be used only by the uninterrupted male line descendants of the person to whom the coat of arms was originally granted.   KLEIN  Family Genealogy ForumSearch this popular genealogy forum for the Klein surname to find others who might be researching your ancestors, or post your own Klein genealogy query. FamilySearch - KLEIN  GenealogyExplore over 3.9  million  historical records which mention individuals with the Klein surname, as well as online Klein family trees on this free website hosted by the Church of Jesus Christ of Latter-day Saints. GeneaNet - Klein  RecordsGeneaNet includes archival records, family trees, and other resources for individuals with the Klein  surname, with a concentration on records and families from France and other European countries. DistantCousin.com - KLEIN  Genealogy Family HistoryExplore free databases and genealogy links for the last name Klein. The Klein  Genealogy and Family Tree PageBrowse family trees and links to genealogical and historical records for individuals with the last name Klein  from the website of Genealogy Today. - References: Surname Meanings Origins Cottle, Basil.  Penguin Dictionary of Surnames. Baltimore, MD: Penguin Books, 1967. Dorward, David.  Scottish Surnames. Collins Celtic (Pocket edition), 1998. Fucilla, Joseph.  Our Italian Surnames. Genealogical Publishing Company, 2003. Hanks, Patrick and Flavia Hodges.  A Dictionary of Surnames. Oxford University Press, 1989. Hanks, Patrick.  Dictionary of American Family Names. Oxford University Press, 2003. Reaney, P.H.  A Dictionary of English Surnames. Oxford University Press, 1997. Smith, Elsdon C.  American Surnames. Genealogical Publishing Company, 1997. Back toGlossary of Surname Meanings Origins