MANAGERIAL

PERSONNEL

Presented by:-
Neelima Thakur
Pallavi Suri
Neha Kapoor
Nitin Chaudhary
 Director

Acc to section 2(13) of the Companies Act 1956,

“director” includes any person occupying the
position of director by whatever name called.
 Definition

An individual who directs, controls, manages or

superintends the affairs of the company.The
directors of a company collectively are referred
to as “Board of Directors” or “Board”.
 Appointment as directors
• Appointment as first directors
• Appointment by company
• Appointment by third parties
• Appointment proportional representation
• Appointment by central government
 MANAGERIAL
REMUNERATION
The remuneration payable to the directors is
determined by the articles of the company . The
managerial remuneration refers to remuneration
payable to:
a) managing directors
b) whole time directors
c) manager
Maximum managerial remuneration

A company may pay directors and manager in

respect of any financial year remuneration not
exceeding level percent of its net profit of that
year

Minimum remuneration
According to Companies (Amendment)Act ,1988
prohibits payment of any sum by way of minimum
remuneration where company has no profits
 Chart showing overall picture of
managerial remuneration
Categories of managerial personnel entitled to remuneration Max %age of
net profits
All the directors when there is a manger or managing 1%
director or whole time director

3%
All the directors when there is no manager or managing director
or whole time director
5%
Managing director (when there is on managing director )
5%
Manager (there is no provision of having more than one manager)
5%
Whole time directors (when there is one such director )
10%
Managing directors and whole time directors taken together
11 %
Total managerial remuneration to all directors , managing
director (s) or manager and / or whole time director (s)
 Register of Directors
Section 303 provides that every company must keep at its
registered office a register office of its directors, managing
directors, manager and secretary. The register shall
contain:
1)In the case of individual- his present name and surname
in full,
 his father’s name and surname in full,
 his residential add. & his nationality,
 his business occupation,
 the particulars of any office held by him in any other
company and the date of his birth.
In the case of body corporate- its corporate name and
registered office,
 the full name & address, nationality, the father’s name of
each of its directors, and
 if it holds the office of manager or secretary in any other
body corporate the particulars of each such office.

In the case of a firm- the name of firm,

 the full name, add., nationality, the father’s name or where a
partner is a married woman ,the husband’s name of each
partner and
 the date on which each become a partner and
 if the firm holds office in other companies the particulars of
each such office.
 MEETINGS OF THE BOARD OF
DIRECTORS
The provisions regarding board meetings are :

1) At least one meeting in every three months.

A meeting of the board of directors must be held at least
once in every 3 months.(Section 285)

2) Notice of Meeting.
Notice of every meeting of Board of Directors must be
given in writing to every director for the time being in India,
and at his usual address in India to every other director.
The Issue of Notice to every director is mandatory.
3) Quorum.
The minimum no. of directors which must be present to
make the proceedings of the Board valid.
 Section 287 lays down that quorum for meetings of board
shall be:
i) One third of its strength
ii) 2 directors whichever is higher.

 Disinterested quorum.
It must consist of directors who are entitled to vote on the
particular resolution before the Board.
Where at any time the no. of interested directors exceed
or equal to two thirds of the total strength of directors, then
the remaining disinterested directors present at meeting,
not less than 2, shall be the quorum for the meeting.
Exp. - Y and D , two directors had made advances to
company in consideration of receiving debentures.The
company had 4 directors, 3 of whom were a quorum. A
resolution was passed granting a debenture to Y. Y did not
vote on this resolution. Another resolution was passed
granting a debenture to D on which D did not vote.
It was held that- 2 debentures formed one transaction in
which Y and D were equally interested and tht the 2
resolutions were invalid for want of quorum.(Re. North
Eastern Insurance Co. ltd.(1919) 2 Ch. 198)
 POWERS OF BOARD
A company being an artificial person, acts through its
directors. The powers which vest in board can be
classified as;-
1) General Powers
2)Specific Powers
3)Powers which can be exercised with consent of
shareholders at meetings.
1) General powers (Section 291)
 Inspect the books of account of company
 Supervise the functions of company’s officers
 Attend the meetings of company’s board of directors
 Express his views on any resolution presented in meetings.
 Oppose any resolution and make a dissenting note
2) Specific powers (Section 292)
 Power to make calls
 Power to issue debentures
 Power to borrow money otherwise than on debentures
 Power to invest the funds of the company, to make loans
 Power to appoint first auditors
 Power to appoint additional directors

3)Powers exercisable with shareholder’s consent

 Sell, lease or otherwise dispose off whole of undertakings of
company
 Remit or give time for repayment of any debt due by director
 Invest money in securities
 Borrow money exceeding the aggregate paid up capital
 Contribute to charitable or other funds
Exceptions. The powers of directors are subject to the control by
shareholders at gen. meeting in the following cases:-
1) Directors acting malafide.
2) Board incompetent.

Exp. - The articles of the company authorised the board to fill

casual vacancies. Some casual vacancies occurred and
filled by shareholders in gen. meeting because at that time
there was no director validly in office. The appointment was
challenged. It was held that appointment was valid.
(Vishwanathan v. tiffins B.A. and P. LTD.AIR 1953 Mad.520)

3) Deadlock in the board.

Exp- There were only 2 directors on board of company & one
refused to act with another. Further they were unwilling to
appoint additional directors under the power conferred on
them by articles. Thus there was deadlock. The
shareholders in gen. meeting appointed an additional
director. The appointment was held valid. (Barran v.
Potter(1974))
 DUTIES OF DIRECTORS

Duties of directors may be discussed under

following heads:
1. Fiduciary duties,
2. Duty for care and skill,
3. Duty to attend board meetings,
4. Duty not to delegate,
5. Duty to disclose interest, and
6. Statutory duties.
FIDUCIARY DUTIES: The director occupies a fiduciary
position and must therefore, exercise their power in good
faith and for the benefit of the company as the whole.
Directors should not enter into arrangements in which
there is a possibility that the directors personal interest
could conflict with those of the company which they are
bound to protect.
DUTY OF CARE AND SKILL:A director must perform his
duties with reasonable care and skill i.e. with that amount
of care which an ordinary man will be expected to take, if
the business of the company was his own.
Eg: A director will be liable for negligence in the carrying
out of his duties, where the dividend was paid by directors
after the company traded only for eight months without
any investigation of company’s trading position, such
payment was improper and directors must refund.
DUTY TO ATTEND BOARD MEETING: A director should
attend the board meeting whenever he is able to do so, but
he is not bound to attend all board meetings.
Section 283(1)(g) provides that the office of director
becomes vacant if he absents himself from three
consecutive meetings of the board or from all meetings of
the board, for a continuous period of three months,
whichever is longer, without obtaining leave of absent from
the board.
DUTY NOT TO DELEGATE: As a rule directors must
perform their duties personally and should not delegate
their office. The directors are bound by the maxim
“delegatus nonpotest delegare”.
DUTY TO DISCLOSE INTEREST: as a director is an
agent of the company, he must see that his in interest and
duty do not conflict. It follows that the company can avoid
a contract in which the director has an interest unless the
prior sanction of the board has been taken.

According to Company’s Act(299), a director who is

interested in any transaction of the company, he is bound
to disclose his interest to the board.
STATUTORY DUTIES:
1. These are enumerated below:
2. Duty not to allot shares until minimum subscription is raised.
3. Duty to sigh the annual report and the certificate attached
thereto.
4. Duty to forward the statutory report to every member of the
company.
5. Duty to call an annual general meeting every year within
proper time.
6. Duty to call an extraordinary general meeting on a valid
requisition.
7. Duty to take a share qualification.
8. Duty to disclose shareholding.
Managing director:
Section 2(26) defines a managing director as, "a director who, by virtue
of an Agreement with the company or a resolution passed by the
company in general Meeting or by its board of directors, or by virtue of
its memorandum or articles of Association, is entrusted with substantial
powers of management which would Not otherwise be exercisable by
him, and includes a director occupying the position of a managing
director, by whatever name called”.

Manager:
As per Section 2 (24) “manager means as individual who, subject to
the Superintendence, control and direction of board of directors, has the
management Of the whole or substantially the whole, of the affairs of
the company and includes,Directors or any other person occupying the
position of a manager, by whatever name called and whether under a
contract of service or not”.
Managing director Whole-time director
The appointment of a managing director The appointment of whole-time director
need not necessarily be made with the requires the sanction of shareholders, by
consent of the members. means of special resolution.

He can be appointed for a maximum period There is no such restriction.

of 5 years.

He can be a managing director of 2 or more He can not be a whole- time director of

companies. more than 1 company.

He has substantial powers of management He is just an employee of the company

having powers as per the terms of
employment.

A managing director and a manager can not He can be appointed together with the
exist simultaneously. managing director or manager.
Manager Managing director
He may not be a director He must be a director of the company
There can not be more than one manager of There may be more than one managing
the company director of the company

He may be appointed under a contract of He may be appointed by virtue of

service or otherwise. agreement or a resolution passed by a
company in general meeting,

Grounds of disqualification remains effective Grounds for disqualification remains active

only for 5 years. for whole life.

The central government may remove the The central government has no such
disqualifications powers.

He has powers more than a managing He has just substantial powers of

director has. management.

His maximum remuneration may not exceed The maximum limit is fixed at 10% of net
5% of net profits. profits of all the managing directors.