Director is an employee of the Company. So often they wonder what is their personal liability. Here I list down few things which you should always keep in mind.
Ensure that all the annual compliance is done:
As you all would be aware, if directors do not get the annual compliance of Company done with the ROC for a period of 3 years, they are disqualified from the Company and cannot be appointed for a further period of 5 years. This rule is very stringent. They are answerable to the shareholders of the Company. ROC can even strike off the Company suo motto by giving 30 days’ notice.
If the Company gets strike off due to director, director is personally liable. He would become responsible for paying the huge penalty as he did not take care of it. Company may suffer huge losses.
Also, the Company may end up losing its goodwill if the Company is doing business and gets strike off.
Revival of the Company is a long process. Also, I am very sure you always want your DIN no to be active. For that please ensure that the compliance is done on time. Forms to be filed with ROC like AOC-4 & MGT-7.
Power to approve the Financial statements and Board report:
Directors sign the Finance statements and Board report of the Company. Hence, they should ensure that the details and the records mentioned there are correct. All the reporting has been properly done. If the Company has violated anything, then it is mentioned in the report. Directors are responsible for signing the wrong/incorrect financial statements. Always have a double check.
Few specific duties of the director
Director will be responsible for all of the following acts.
Director is even personally responsible for any criminal liabilities. He has to ensure that Corporate Governance committees are properly formed and be vigilant enough for considering all the above points. Any violation can lead to penalties.