Explain the liability of a director for:

(i) errors of judgement,

(ii) negligence, and

(iii) misfeasance. [November, 19921

41. What is the maximum extent up to which remuneration to managerial personnel in a public company and a private company which is subsidiary of

public company, may be paid by these companies? What is included in such remuneration? What is the position under the Companies Act for such

payment, where

the profits of the company are inadequate? [May 4, 1992J

42. Certain number of directors of D Company Limited were to retire by rotation at the Annual General Meeting, which ought to have been held latest by

30^th June, 1991. Due to some reasons, the Annual General Meeting could not be held within the time limit. The Board of Directors of DCompanx Limited

bypassing resolution at a specially convened meeting of the Board allowed these directors to continue till the Annual General Meeting was held. The

shareholders of the company challenge the decision of the Board and ask the Board of Directors to remove these directors on the ground that the

resolution of the Board of Directors is not valid one. Considering the provisions of the Companies Act, decide giving reasons whether :

(1) Shareholders’ contention is tenable?

(2) What would be your answer in case Articles of Association of the Company provided for the retirement of all the directors at the Annual General

Meeting? [November, 1993J

43. (a) State the powers of the Board of Directors of a company, which it may exercise only

by passing resolutions at the meetings of the Board. [November, 19911

(b) What are the powers which the Board of Directors may exercise only with

the consent of the company in general meeting? [November, 19911