Introduction
The Article discusses the importance of directors and their various role in the regulation of the company as per the Companies Act, 2013 and the Secretarial Standards issued by the Institute of Company Secretaries of India.
Have you ever wondered how a corporation makes a decision? Being an artificial judicial person, who makes the decisions on behalf of the company? who is authorized to make the decisions on behalf of the company?. The brain behind the decisions and the smooth operations are its Board of Directors. Directors are the persons who possess requisite knowledge, qualification or experience to run the company. Since the artificial judicial person does not possess the above qualities hence, directors are appointed to run the Company. The Team of directors are known as Board of Directors. The Board of Directors are entrusted with the company’s management and well-being. Since a company is an artificial person in the eyes of laws, some human beings are to be appointed to look after the well-being of the company, hence, a director who possess requisite experience and knowledge is appointed to manage the company.
As per section 2(34) of the Companies Act, 2013, a director is appointed by the board of directors. Only individuals are appointed on the board, no company or association of people are to be appointed on the board. If we think of the company as a separate legal entity, then the directors are the mind and body behind it.
When the company is incorporated, the charter documents being the Memorandum of Association and Articles of Association are the documents which govern the company. The directors when appointed are bound by these charter documents. As per section 166 of the Companies Act, 2013, the directors are bound to act in good faith in order to promote the objects of the company for the benefit of its members, shareholders as a whole and in the best interests of the company, its employees, the community and for the protection of the environment. The director shall exercise his duties with due and reasonable care, skill, due diligence and shall be able to exercise independent judgment. A director of the company shall not get involved in a situation in which he may have some direct or indirect advantage or conflicts with the interest of the company. Hence, any decision involving the interest of the company are first to be confirmed, approved by the board of directors.
Board Meetings
Number of Board Meetings
As per section 173 of the Companies Act, 2013, every company shall hold atleast four (4) board meetings in a calendar year. The company can always hold more than four (4) board meetings if the matters require the approval of the board. Furthermore, care should be taken that the gap between the board meetings should not be more than 120 days. In case of a small company or a One Person Company or a dormant company shall hold at least one (1) board meeting in each half calendar year and the gap between the meetings is not less than ninety (90) days.
Convening of Board Meetings
Any director of the company may at any time summon a meeting of the board, and the company secretary of where there is no company secretary on a requisition by a director shall convene a meeting of the board. The board meeting can be convened either physically or through other audio visual means.
Notice
Notice in writing of every meeting shall be given to the director by hand post, speed post, or by registered post or by courier or facsimile or by e-mail or by any other electronic mode. The Notice can be issued by the Company Secretary or if there is no Company Secretary, by any of the director of the company. The Notice shall be issued atleast seven (7) days before the day of meeting. A shorter notice can be given if the meeting is to be called urgently if one independent director if any is present at such meeting. Shorter Notice Consent letters of the directors shall be obtained before the meeting. The Notice shall have Agenda and notes to Agenda for the directors to have a clear understanding of the subject matter to be taken up at the board meeting.
Quorum
The quorum of the board meeting shall be one third of the strength of the board or at least two directors, whichever is higher, quorum shall be counted irrespective of their presence either physically or electronically and they shall be present throughout the meeting. A director should not be counted for quorum if he is interested in any agenda items, and he shall not be present physically of electronically during discussions and voting for that agenda item.
Attendance at board meetings
Every company shall maintain the attendance register, each page of the attendance sheet shall be serially numbered. The attendance sheet shall contain the serial number, date, place, time of the meeting, names of the directors and signature of the director, company secretary and the invitees who were present in the meeting. The register shall be maintained at the registered office of the company or at such place as approved by the board. The attendance sheet shall be authenticated by the company secretary or the Chairman of the meeting.
Minutes and its maintenance
Minutes are the recording of the board proceedings in written form in books, to be maintained by the company secretary of the company. Minutes may be maintained in electronic form in such form and manner along with time stamp as per the Companies Act, 2013. The minutes shall be consecutively paged numbered. One entered into the minutes books no tampering is to be made in any manner. It shall be kept at the registered office of the company or at such other place as may be decided by the board. The content of the minutes shall begin with serial number, type of the meeting, name of the company, day, date, venue and time of commencement and conclusion of the meeting. The Directors present shall be named and the presence either in person or electronically shall be recorded along with the invitees present in the meeting. Minutes shall contain a record of all appointments made at the meeting. Minutes shall contain a fair and correct summary of the proceedings of the meeting.
Within fifteen (15) days from the conclusion of meeting of the board, a draft of the minutes shall be circulated to the board for their comments. If any comments received from the directors the same shall be modified and if there are no comments then the minutes shall be entered in the minutes book and the signature of the Chairman is to be affixed at below and initials on every page. The date of entry in the minutes books shall be recorded by the company secretary.
Minutes of all meetings shall be preserved for a period of eight years.
Conclusion
As per Secretarial Standards and the Companies Act, 2013, the management of the company are responsible for the running of the company. Directors play a very important role for the success of the company, they are the face of the company. It is the authorized person to act on behalf of the company to take decisions on behalf of the company for the benefit of the shareholders, employees, the company and other stakeholders.
Author Bio
