To what extent can the directors of a company be considered its trustees,
agents or managing partners of the company?
Are the directors employees of a company? Discuss in the light of relevant case laws.
It is difficult to define the exact legal position of the director of a company. The Companies Act makes no effort to define their position. They have at
various times been describedby judges as agents, trustees or managing partners. In the words of Bowen, L.J.,
“Directors are described sometimes as agents, sometimes as trustees and sometimes as managing partners. But each of these expressions is used
not as exhaustive of their powers and responsibilities but as indicating useful points of view from which they may for the moment and for the particular
purpose be considered.”
Directors as Agents
“Directors may correctly be described as agents of the company,”
through directors, and the case is, as regards those directors, merely the ordinary case of principal and agent.” The ordinary rules of agency will,
therefore, apply to any contract or transaction made by them on behalf of the company. Thus, where the directors contract in the name and on behalf of
the company, it is the company which is liable on it and not the directors.
Directors as agents make the company liable even for contempt of curt. In Vineet Kumar Mathur v. Union of
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