It has been Amendmended in 2002 and 2006
Section 3(1)(i) of the Companies Act 1956 defines a company as :
“A company means a company formed and registered under this act or an
Company is Defined as “a voluntary incorporated association which is an
person , created by law with limited liability having a common seal and
If an association is not incorporated under companies act ,it becomes illegal
Distinct person- separate legal personality
Capacity to sue and be sued
Royal Charted Company
Company Ltd Shares
Company Ltd by Guarantee
The company being and artificial person carries on its activities
and Business through individuals called directors [Sec.2(13)]
Every company has atleast 2 directors
Maximum permissible limit of directors is 12 .where the
number of directors Fall below the maximum number the
remaining directors cannot act
Under Sec253 and 266A to 266G
DIN means director identification number which the central government
May allot to any individual intending to be appointed as a director or to
Any existing director of a company for the purpose of his identification
An individual has to apply to the central government for allotment of DIN
Any individual cannot be given two DINS
Directors shall be appointed in the General Meeting by the
Retiring director or a person other than retiring director can be
appointed as a Director of the company
At a general meeting of a public or a private company a motion
shall not be made For two or more directors
Share qualification means the share to be taken by the director
to qualify him As a director of the company
It is duty of every director to hold a specified share qualification
The act however does not prescribe any share qualification
No person shall hold the office at the same time as a directors in more than
15 companies Under Sec 285
A private company which is neither a subsidary nor a holding company of a
An unlimited company
Not profit organization
A company in which such person is only an alternative director
By Shareholders Under Sec 284
A company may buy ordinary resolution to remove the director (not being a
Director appointed by the central government ) before the expiry of his
period of Office
Director appointed by the central government
In case of the private company director holding office for life as on 1.4.1952
Central government under following circumstances may
remove a director
If a person is found guilty of fraud of default in carrying
Out in duties
Action of a person is likely to cause or has caused serious
Injury to the industry and trade
On application by any member of the company in case of
Oppression or mismanagement the company law board may
remove a director
No director can be appointed if he is terminated till 5years
Office of the director shall become vacant if……
He is found to be of unsound mind
He is absent for three consecutive board meetings
If he fails to disclose the information in respect to contract he is interested
If he becomes insolvent
He fails to obtain share qualification within 2 months
If he is convicted by court for any offence
In the meeting resolution for the re-appointment of the director has been put to the
By a notice in writing addressed to the company or its board of directors ,expressed his
Unwillingness top be re-appointed .
He is not qualified or disqualified from appointment.
A resolution, whether special or ordinary, is required for his appointment or
Where a resolution for the appointment of two or more director by a single resolution
Is passed (sec.256).
Board of directors has following powers :
1) To call shareholders in respect of unpaid money on their
2) To issue debentures
3) To make loans.
4) To invest funds of company.
1) Act honestly.
2) Attend board meetings .
3) Pay call amount.
4) Must not make secret profits.
5) Disclose his name ,occupation and nationality.
6) Obtain share qualification wherever necessary.
1) He cannot assign his office or delegate his functions
2) He cannot take any loan from the company except with
prior approval of central government wherever applicable .
3) He cannot hold any place of profit in the company without the
consent of the company by special resolution.
The directors are also liable to pay compensation in following
1) For untrue statement in prospectus .
2) For contracts entered into on behalf of the company where
directors act in their own name.
3) For irregular allotment of shares .
4) Where directors act unlawfully.
1)Directors as agent
2)Directors as trusties .
3)Directors as managing partners.
4)Directors as employees .