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Roles and duties of Director

Roles And Duties Of Director

Roles and duties of Director :


A Company Director is one of the most important roles in a company, and the formation of a suitable board of directors can ultimately determine your business success.

Therefore, when you set up a company, you must ensure your company’s director shares the vision of your company’s direction. If you are a company director seeking information about your roles and responsibilities.

Director of a Company

The Directors are the persons who are elected by the shareholders of the Company. They direct, conduct, manage and supervise the affairs of the Company. A Director is legally responsible for running the company. They also have other legal duties such as to file the accounts on time, safeguarding the company’s assets and not to carry on trading if the company cannot pay its debts.

Every Director shall be appointed at the general meeting of the company, unless otherwise expressly provided in this act. If Directors are found guilty on wrongdoing they can be fined, imprisoned, made liable to pay the company’s debts themselves or disqualified from being a company director for a number of years.

Roles of Director

  1. Agent: The director acts as an agent of shareholders and promotes the objects of the company so that the company can earn profits and increase the intrinsic value of the share and earning of the company.
  2. Employee: Any whole-time director appointed by the Board of Directors and approved by the shareholders of the company acts as an employee of the company by managing the day-to-day affairs of the company.
  3. Officer: Director is treated as an main officer of the company and shall be liable for penal consequences under various statues, if affairs of the company are not in compliance with the Companies Act, Income Tax Act, FEMA provisions and other applicable Legal statues defined for various industries.
  4. Trustee: Director is treated as trustee of the company. Money and property of the powers are entrusted to and vested in them only as trustees.

Duties of Director

Effectively, Company directors need to act together as a “Board of Directors” but oftentimes the board may delegate specific powers to a board committee or to an individual company director.

  1. To Act with powers: A company director has to adhere to the company’s policy and delegated tasks – this includes the Articles of Association and wider constitutional issues, such as shareholder/joint venture agreements.
  2. To promote the success of the company: A director must act in good faith and in a manner that he/she considers most likely to promote the company’s success for the benefit of its members as a whole.

In doing so, a director must have regard for the consequences              of his/her decisions on other stakeholders, including employees, creditors, suppliers, customers and communities, as well as considering the impact on the environment, the reputation of the company and the long-term success of the business.

  • Carry out independent judgment: A company director must use independent judgment, bearing the responsibility and accountability of making independent decisions. However, the company’s constitution/ agreement must still be obeyed.
  • Consistently exercise reasonable care, skill and diligence: Company directors must exercise reasonable care, skill and diligence with carrying out all functions of the role. This means that a director is expected to possess the general knowledge, skill and experience that could be reasonably expected of a person appointed to carry out the functions of a director in relation to a particular company, rather than being appointed purely on the merit of name or reputation.
  • To avoid conflicts of interest:Company directors must avoid or manage all situations in which they have or may have, conflicts of interest that could affect their objectivity and loyalty to he company. Examples of such conflicts of interest include:
  • Holding an advisory position (e.g. consultant or accountant) in a firm that is a competitor of the company
  • Acting as a director and/or holding majority shares in a company that is, or could be, affected by the activities of the company (e.g. a supplier, client or competitor of the company)
  • Other business or personal relationships with individuals or other entities that are, or could be, affected by the activities of the company
  • Taking advantage, for their own personal gain, of property, information, or opportunities belonging to the company, even if the company does not take advantage of these opportunities

CS Seema Bansal

CS Seema Bansal having experience of two years under CS firm and also having degree of B. Com and M. Com. Having expert knowledge of ROC related work and other company related compliances with MCA.

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