1. Min. no. of Directors (Individuals) in Public 3, In Private 2, In One Person 1, Max. no. of Directors is 15 for any type of co. More than 15 directors may be appointed by Altering AoA + Passing SR in GM.
[Section 14 + 149(1) + First Proviso]
2. (a) Retiring director à At AGM à Vacancy not so filled up + Not expressly resolved to “Not to fill vacancy” à Adjourn AGM (Same day next week) à Vacancy not so filled + Not expressly resolved to “Not to fill” à Retiring director shall be deemed to have been re-appointed.
(b) No Re-appointment if à Resolution for re-appointment was put and lost or Director expressed not to be re-elected or Director is disqualified
[Section 152(7)]
3. AoA may give power to BOD to appoint any person as additional director (Other than person who failed get appointed in GM), Tenure – Till next AGM date / or last date on which AGM should have been held. Additional director can be appointed only by BOD and not by members. Other Conditions à DIN à Declaration that he is not disqualified à Appointment by BOD à Consent to act as director to registrar within 30 days of appointment à Name entered in statutory records.
[Section 161(1)]
4. Mr. P appointed by XYZ Ltd. à He Died à Casual vacancy in normal course à BOD appointed Mr. C in place of Mr. P à Allowed under section 161(4) + Subject to AoA + Subsequent approval by members in immediate next GM à Tenure – Remaining tenure of Mr. P à Mr. C Died à Now BOD cannot appoint any other person in place of Mr. C. because BOD can only fill casual vacancy on vacation of office of director appointed in GM and Mr. C was not appointed in GM.
[Section 161(4)]
5. Company failed to repay deposit due and continue to fail deposit for 1 yr or more à A person who has been director of a such Company is not eligible to be appointed as a director of any other company for a period of 5 yrs from date of original default.
[Section 164(2)]
6. Unlisted Public company Minimum 2 IDs à SC 10 Cr or Turnover 100 Cr or Loan + Debenture + Deposit 50 Cr+.
[Rule 4 of AQD 2014]
Listed Public company Minimum 1/3rd of total number of directors as IDs (Take Fraction as 1)
[Section 149(4)]
7. (a) A person attained 70 yrs. age may be employed as MD, WTD or manager by passing SR in GM à If not SR but votes casted in favour exceeds + CG is satisfied on application made by BOD that person is most beneficial to the co.
[Section 196(3)]
(b) - Remuneration by a public co. to MD + WTD + Manager + Directors = 11% of NP
- Remuneration to director (MD/WTD ) = 1%/3% of NP, [MD/WTD, 4%], for more SR required.
[Section 197(1) + First Proviso + 198]
8. If there is no profit or inadequate profits, the co. shall not pay any of the director remuneration + Fees expect in accordance with “Schedule V”, pass SR in case to pay excess.
Effective capital vs. Limit of Remuneration to a Managerial person
Negative to Rs. 5 Cr - Rs. 60 Lakhs
Rs. 100 Cr to Rs. 250 Cr - Rs. 120 Lakhs
9. Compensation for loss of office can only be paid to MD/WTD/Manager for amount he would have earned in unexpired term or 3 years whichever is shorter, but no compensation if he has been found guilty of fraud/breach of trust/Gross negligence. Once an adhoc payment is done, company cannot recover it.
Case - Bell vs. Lever Bros., Director is not legally bound to disclose any breach of his fiduciary obligations so as to give company an opportunity to dismiss him.
10. (a) Remuneration payable to any one MD/WTD/Manager = 5% of NP (MD + WTD + Manager = 10%), SR for excess.
(b) Determine Remuneration payable to any director in accordance with AoA/OR/SR and includes fees payable for service in any other capacity and excludes service rendered in professional service + in opinion of NRC that director possesses requisite qualification for the practice of the profession.
- Also disclose ration of remuneration of each director to median employee’s remuneration
11. (a) When BM could not be held for want of quorum à Check AoA à Meeting is adjourned automatically to next week same day
[Section 174(4)]
(b) BR passed by circulation à Draft resolution is circulated along with necessary papers to all directors/member of the committee at their Indian address registered with co. by hand/post/courier/e-mail/Fax à Resolution is approved by majority votes of entitled directors à Note in MoM of next meeting.
- If 1/3rd directors requires to decide in meeting, then chairperson shall put resolution in meeting instead of deciding by circulation.
[Section 175(1)]
12. BM shall be called giving 7 days notice in writing to ALL directors at his address registered with co. by hand/post/e-mail/Fax à Every officer of co. whose duty is to give notice & failed is liable to pay Rs. 25,000/-
Case – Parmeshwari Prasad Vs. Union of India, if notice is not served to all directors in writing, resolution passed in BM shall not be valid.
[Section 173(3) + (4)]
13. Director went out of India for period 3 months à BoD may appoint a person as Alternative director. Alternative director must not be holding any other directorship of any type in same co.
[Section 161(2]
14. ALL Directors for Notice of BM includes additional director, alternative director, original director, interested director, director who expressed inability to attend, director gone abroad.
15. (a) Power of BoD by passing resolution at BM à Call money for unpaid part, Authorize buy back of securities, Issue securities, borrow money, invest funds, grant loans, approve F.St and Board Report, diversify business, approve amalgamation, Acquire controlling stake in another co.
(b) Delegation to any committee of director/MD/Manager/Other principle officer of branch to borrow money, invest funds, grant loans is allowed on such conditions as may specify.
[Section 179(3)]
16. (a) Buy Back of shares shall be authorized by AoA à BR in BM – for buy back 10% of ESC + Free Reserves à SR in GM if more than 10%
[Section 68(2) + 179(3)]
(b) Investment of Surplus funds in shares of other company is governed by Section 186 i.e. à Approval of the PFI concerned (if term loan is subsisting) à an unanimous BR is required of all directors present at BM à No Delegation in this specific case is allowed.
17. Audit committee à Formed within 1year of incorporation of the company à At least 3 directors out of which
Majority is IDs à Chairperson with ability to read and understand F.St. à Board report disclose composition of AC + any recommendation of AC not accepted by Bo + Reason thereof.
[Section 177(8) + 134(3)]
18. AC shall conduct discussion with Auditors periodically about Internal control system, review quarterly and annual F.St. and send BoD with recommendations if any.
19. BoD can borrow Long term Borrowing (not temporary loans) from Financial Institution without approval of shareholders in GM upto 100% X (PSC + Free reserves + Security premium) (-) Amount already bought
[Section 180(1), not applicable to private company]
20. BoD can give Contribution to charitable funds without approval of sharesholders in GM = 5% of average 3 Yrs NP
[Section 180(1)]
[Section 14 + 149(1) + First Proviso]
2. (a) Retiring director à At AGM à Vacancy not so filled up + Not expressly resolved to “Not to fill vacancy” à Adjourn AGM (Same day next week) à Vacancy not so filled + Not expressly resolved to “Not to fill” à Retiring director shall be deemed to have been re-appointed.
(b) No Re-appointment if à Resolution for re-appointment was put and lost or Director expressed not to be re-elected or Director is disqualified
[Section 152(7)]
3. AoA may give power to BOD to appoint any person as additional director (Other than person who failed get appointed in GM), Tenure – Till next AGM date / or last date on which AGM should have been held. Additional director can be appointed only by BOD and not by members. Other Conditions à DIN à Declaration that he is not disqualified à Appointment by BOD à Consent to act as director to registrar within 30 days of appointment à Name entered in statutory records.
[Section 161(1)]
4. Mr. P appointed by XYZ Ltd. à He Died à Casual vacancy in normal course à BOD appointed Mr. C in place of Mr. P à Allowed under section 161(4) + Subject to AoA + Subsequent approval by members in immediate next GM à Tenure – Remaining tenure of Mr. P à Mr. C Died à Now BOD cannot appoint any other person in place of Mr. C. because BOD can only fill casual vacancy on vacation of office of director appointed in GM and Mr. C was not appointed in GM.
[Section 161(4)]
5. Company failed to repay deposit due and continue to fail deposit for 1 yr or more à A person who has been director of a such Company is not eligible to be appointed as a director of any other company for a period of 5 yrs from date of original default.
[Section 164(2)]
6. Unlisted Public company Minimum 2 IDs à SC 10 Cr or Turnover 100 Cr or Loan + Debenture + Deposit 50 Cr+.
[Rule 4 of AQD 2014]
Listed Public company Minimum 1/3rd of total number of directors as IDs (Take Fraction as 1)
[Section 149(4)]
7. (a) A person attained 70 yrs. age may be employed as MD, WTD or manager by passing SR in GM à If not SR but votes casted in favour exceeds + CG is satisfied on application made by BOD that person is most beneficial to the co.
[Section 196(3)]
(b) - Remuneration by a public co. to MD + WTD + Manager + Directors = 11% of NP
- Remuneration to director (MD/WTD ) = 1%/3% of NP, [MD/WTD, 4%], for more SR required.
[Section 197(1) + First Proviso + 198]
8. If there is no profit or inadequate profits, the co. shall not pay any of the director remuneration + Fees expect in accordance with “Schedule V”, pass SR in case to pay excess.
Effective capital vs. Limit of Remuneration to a Managerial person
Negative to Rs. 5 Cr - Rs. 60 Lakhs
Rs. 100 Cr to Rs. 250 Cr - Rs. 120 Lakhs
9. Compensation for loss of office can only be paid to MD/WTD/Manager for amount he would have earned in unexpired term or 3 years whichever is shorter, but no compensation if he has been found guilty of fraud/breach of trust/Gross negligence. Once an adhoc payment is done, company cannot recover it.
Case - Bell vs. Lever Bros., Director is not legally bound to disclose any breach of his fiduciary obligations so as to give company an opportunity to dismiss him.
10. (a) Remuneration payable to any one MD/WTD/Manager = 5% of NP (MD + WTD + Manager = 10%), SR for excess.
(b) Determine Remuneration payable to any director in accordance with AoA/OR/SR and includes fees payable for service in any other capacity and excludes service rendered in professional service + in opinion of NRC that director possesses requisite qualification for the practice of the profession.
- Also disclose ration of remuneration of each director to median employee’s remuneration
11. (a) When BM could not be held for want of quorum à Check AoA à Meeting is adjourned automatically to next week same day
[Section 174(4)]
(b) BR passed by circulation à Draft resolution is circulated along with necessary papers to all directors/member of the committee at their Indian address registered with co. by hand/post/courier/e-mail/Fax à Resolution is approved by majority votes of entitled directors à Note in MoM of next meeting.
- If 1/3rd directors requires to decide in meeting, then chairperson shall put resolution in meeting instead of deciding by circulation.
[Section 175(1)]
12. BM shall be called giving 7 days notice in writing to ALL directors at his address registered with co. by hand/post/e-mail/Fax à Every officer of co. whose duty is to give notice & failed is liable to pay Rs. 25,000/-
Case – Parmeshwari Prasad Vs. Union of India, if notice is not served to all directors in writing, resolution passed in BM shall not be valid.
[Section 173(3) + (4)]
13. Director went out of India for period 3 months à BoD may appoint a person as Alternative director. Alternative director must not be holding any other directorship of any type in same co.
[Section 161(2]
14. ALL Directors for Notice of BM includes additional director, alternative director, original director, interested director, director who expressed inability to attend, director gone abroad.
15. (a) Power of BoD by passing resolution at BM à Call money for unpaid part, Authorize buy back of securities, Issue securities, borrow money, invest funds, grant loans, approve F.St and Board Report, diversify business, approve amalgamation, Acquire controlling stake in another co.
(b) Delegation to any committee of director/MD/Manager/Other principle officer of branch to borrow money, invest funds, grant loans is allowed on such conditions as may specify.
[Section 179(3)]
16. (a) Buy Back of shares shall be authorized by AoA à BR in BM – for buy back 10% of ESC + Free Reserves à SR in GM if more than 10%
[Section 68(2) + 179(3)]
(b) Investment of Surplus funds in shares of other company is governed by Section 186 i.e. à Approval of the PFI concerned (if term loan is subsisting) à an unanimous BR is required of all directors present at BM à No Delegation in this specific case is allowed.
17. Audit committee à Formed within 1year of incorporation of the company à At least 3 directors out of which
Majority is IDs à Chairperson with ability to read and understand F.St. à Board report disclose composition of AC + any recommendation of AC not accepted by Bo + Reason thereof.
[Section 177(8) + 134(3)]
18. AC shall conduct discussion with Auditors periodically about Internal control system, review quarterly and annual F.St. and send BoD with recommendations if any.
19. BoD can borrow Long term Borrowing (not temporary loans) from Financial Institution without approval of shareholders in GM upto 100% X (PSC + Free reserves + Security premium) (-) Amount already bought
[Section 180(1), not applicable to private company]
20. BoD can give Contribution to charitable funds without approval of sharesholders in GM = 5% of average 3 Yrs NP
[Section 180(1)]
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