Chapter 6 Directors and Key Managerial Personnel of a Company Solutions

Group ‘A’

Group ‘B’

(a) Board of Directors

(5) Extensive Powers of management

(b) Managing Director

(6) Substantial Powers of management

(c) Company Secretary

(2) Assists and advises the Board

(d) First Directors

(7) Appointed by Promoter

(e) Alternate Director

(1) Nominated by the Board

Group ‘A’

Group ‘B’

(a) Public company

(1) Arises due to death of Director

(b) Private company

(2) Collective Powers

(c) Secretarial Auditor

(3) Individual Powers to Directors

(d) Casual Vacancy of a Director

(4) Arises due to additional work

(e) Powers of the Board

(5) Appointed by Managing Director

(6) At least 2 (two) Directors

(7) At least 3 (three) Directors

(8) At least 15 (fifteen) Directors

(9) At least 1 (one) Director

(10) Appointed by the Board

Group ‘A’

Group ‘B’

(a) Public company

(7) At least 3 (three) Directors

(b) Private company

(6) At least 2 (two) Directors

(c) Secretarial Auditor

(10) Appointed by the Board

(d) Casual Vacancy of a Director

(1) Arises due to death of Director

(e) Powers of the Board

(2) Collective Powers

1C. Write a word or a term or a phrase that can substitute each of the following statements.

1D. State whether the following statements are True or False.

1E. Find the odd one.

1F. Complete the sentences.

1G. Select the correct option from the bracket.

Group ‘A’

Group ‘B’

(1) Rotational Director

…………………..

(2) ……………………….

Alternate Director

(3) Woman Director

…………………..

(4) ……………………….

First Director

Group ‘A’

Group ‘B’

(1) Rotational Director

Retire by Rotation

(2) Appointed in Place of a director who is absent

Alternate Director

(3) Woman Director

Every Listed Company

(4) Appointee by Promoters

First Director

1H. Answer in one sentence.

1I. Correct the underlined word and rewrite the following sentences.

2. Explain the following terms/concepts.

3. Study the following case/situation and express your opinion.

1. Mr. A is a commerce graduate. He has vast experience in the field of finance and the financial market. He wishes to become a director of PQR Co. Ltd.

Question (a).
Is he required to obtain DIN?
Answer:
He was required to obtain DIN. It is compulsory to acquire DIN for every Director.

Question (b).
Can PQR Co. Ltd. object to his directorship on lack of specialized qualification?
Answer:
The company act has not prescribed any academic or professional qualification for directors, so he can obtain directorship.

Question (c).
If he is appointed as director of PQR Co. Ltd, is he entitled to remuneration?
Answer:
The managerial position entitles him to get managerial remuneration so if Mr. A is appointed as director of PQR Co. Ltd then he is entitled to remuneration.

2. Mr. Z is a member of the Institute of Company Secretaries of India.

Question (a).
Can Mr. Z be appointed as pro-tem Secretary of LMN Ltd. which is under formation?
Answer:
Yes, Mr. Z can be appointed as pro-tem secretary of LMN Ltd. which is under formation. The First Secretary is appointed by the promoters of the company.

Question (b).
Can Mr. Z work as Secretarial Auditor?
Answer:
Yes, Mr. Z can work as Secretarial Auditor because he is a member of ICSI.

Question (c).
Mr. Z wishes to be employed as whole time Secretary in companies ABC Ltd. and OPC Ltd. Is he allowed?
Answer:
Mr. Z, as a whole-time secretary, cannot hold office in more than one company. So, Mr. Z can be employed either in ABC Ltd or One Person Company and not in both.

3. Mr. M wishes to be the Managing director of QRS Ltd.

Question (a).
The age of Mr. M is 30 years. Can he be appointed as MD of a company?
Answer:
Yes, Mr. M is 30 years old and the age required to be completed for MD’s post is 21 years. So he can be appointed as MD of a Company.

Question (b).
Is it necessary that Mr. M should be one of the directors on the Board of QRS Ltd?
Answer:
Yes, It is necessary that Mr. M should be one of the directors on the board of QRS Ltd. He should be appointed by the board.

Question (c).
For how long a period QRS Ltd. can appoint Mr. M. as a Managing Director?
Answer:
QRS Ltd can appoint Mr. M. as a managing director for a period of 5 years.

4. Distinguish between the following.

5. Answer in brief.

6. Justify the following statements.

7. Answer the following questions.

Role of the Directors:

Disqualification:

Appointment:
A Managing Director may be appointed by any one of the following ways:

Term of office:
The term of office of the Managing Director cannot exceed 5 years at a time, but he can be reappointed as such for a further period of five years.

The number of Managing Directorship:
A Managing Director can not act as such for more than two companies at the same time.

Remuneration:
The remuneration paid to the Managing Director is subject to the maximum limit of 5% of the net profit of a company or a monthly salary. If a company has more than one Managing Director then total remuneration paid to them (all) shall not exceed 10% of the net profit.

Powers of a Managing Director:

Duties of a Managing Director:

Duties of a Company Secretary:
It is categorized as (A) Statutory Duties and (B) General Duties.

(A) Statutory Duties:

(B) General Duties:

Rights of a Secretary:

Role of Company Secretary:

(ii) Secretary as a Co- ordinator:

(iii) Secretary as an Administration officer: