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Thursday, January 3, 2008

Who is a ‘director’? What are his qualifications and disqualifications

J holds the office of managing director of a private company for life. The company’s Articles empower him to appoint a person to be the managing

director in succession to him. J, therefore, in the exercise of his powers, appoints by will D as the managing director to hold office after the former’s death.

Some members of the company challenge the provision of the Articles and question the validity of the appointment

of D. Examine the validity of the contention of the members. [May, 1993]

36. Explain: “Directors are not the servants of the company they represent.” Discuss the true position of the directors in a company. [May, 1993]

37. What are the restrictions imposed by the Companies Act, 1956 on the powers of a company to appoint a Managing Director? [May, 1993]

38. A was appointed director of a company in its Annual General Meeting. He took over the office and started acting on behalf of the company as its

director. Subsequently, it was found that the appointment of the director was not valid because in the meeting where he was appointed certain members

who had voted were not qualified to vote and certain members had voted twice by mistake. There were also certain mistakes in the counting of votes. As

such, the appointment of the director was held to be invalid. Would the acts of A, done by him as

director, be valid and binding upon the company? [November, 1992]

39. A, a Chartered Accountant, in addition to being a director of the company, was rendering professional services to the company’.. To secure his

professional services for a further period of 5 years, the company passed a resolution at its annual general meeting agreeinto pay “him fE;?e, subject to

a maximum of Rs. 15,000 per annum for a period of 5 years. The company then requested the Central Government to accord its approval to the payment

of remuneration to the director, in terms of proviso to Section 309 (1) of the Companies Act. While stating that the petitioner possessed the requisite

qualifications for rendering

professional services, the Central Government directed that the remuneration payable to him shall not exceed Rs. 7,000 per annum for 5 years. How do

you

react to the decision of the Central Government? [November, 1992J

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