Page 286 - DMGT407Corporate and Business Laws

Anj Professional University Unit 12: Management of Companies

Unit 12: Management of Companies Notes

CONTENTS
Objectives
Introduction

12.1 Directors and their Legal Position
12.1.1 Legal Provisions as Regards Directors
12.2 Managing Director and Manager
12.2.1 Manager
12.3 Compensation to Directors
12.3.1 Compensation to Directors for Loss of Office
12.3.2 Remuneration of Managerial Personnel

12.4 Powers of the Board of Directors
12.5 Duties and Liabilities of Directors and Audit Committee
12.5.1 Liabilities of Directors
12.5.2 Audit Committee
12.6 Summary
12.7 Keywords
12.8 Review Questions
12.9 Further Reading

Objectives

After studying this unit, you will be able to:
Describe the legal provisions regarding directors;
Discuss the duties and types of directors;

Explain the category of directors.
Introduction

A company, being an artificial person, acts through human agency. Accordingly, under the Act,
it is necessary for every company to have a Board of Directors. In addition to this, the categories
of managerial personnel may be appointed (s.197-A): (i) Managing Director; or (ii) Manager. But
s.197A does not prohibit the employment of other managerial personnel, such as executives or
whole-time directors, which do not come within the term “managing director” or “manager”.

12.1 Directors and their Legal Position

Section 2(13) defines a director as including “any person occupying the position of director, by
whatever name called.” This is a definition based purely on function; a person is a director if he
does whatever a director normally does. But the Act gives no further guidance on the function,
duties and position of a director. In reality, directors are the persons who direct, conduct, manage

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