Duties of Directors of the Company
The companies registered under the Companies Act, 2013, have a separate legal entity. The operations are managed by the Board of Directors, and not the owners, subject to the provisions of said Act. Along with the powers of management, directors have been assigned with some duties and responsibilities, provided in the said Act.
Section 166 of the Act, deals with the duties of the directors, towards the company. Here, duties specified under the law are as mentioned below :
1. Act according to Articles of Association
Every director of the company shall act, according to the terms decided under Article of Association. The powers given in the Articles cannot exceed, unless the provisions permitted.
2. Act in the interest of the company
All the directors shall act in good faith in order to promote the objects of the company, for the benefits of its members, as a whole, and in the best interests of the company, employees, the shareholders, the community, and for the protection of the environment.
3. Don’t make secret profits
A director shall not achieve, or attempt to achieve any undue gain or advantage, either to himself or to his relatives, partners, or his associates, and if found guilty, he shall be liable to pay an amount equal to that gain.
4. Due care and skill
Every director needs to ensure that the due care, skills and diligence is in exercise, while taking the decisions for the company. Also, independent judgement should be exercised.
5. Confidentiality
The directors are the core management personnel of the company. They come to know various sensitive, confidential information, while exercising their duties. This information can damage the company, in case of disclosure. Hence, there is a need to maintain confidentiality for the sensitive information of the company.
6. Attend meetings
As required by law, directors need to attend the meeting conducted for the operations of the company. He must provide valuable ideas, inputs for the smooth functioning and betterment of the company, whenever required.
7. Conflict of Interest
Directors must know that the company interests are more important than his personal interests. He should not be involved in such a situation, in which he may have any direct or indirect interest that conflicts, or possibly may conflict, to the interest of the company.
8. Assignment of his office
Director can not assign his office to any person. Such assignment, if done, shall be void. Directors must fulfil his/her duties towards the Company, otherwise he/she will be liable to be punished according to the provisions of law.
Also read the Article on Appointment of Director
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About Author – Deepa Kaintura
I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here.
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