Duties of directors
📚 Law Minded summary
The statutory statement of what a director owes the company.
A director must act in accordance with the articles, in good faith to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and the environment.
They must exercise reasonable care, skill and independent judgement, must not put themselves in a position where their interest conflicts with the company's, must not make any undue gain, and must not assign their office to someone else.
A director who makes an undue gain has to hand it back to the company.
(1) Subject to the provisions of this Act, a director of a company shall act in accordance with the articles of the company.
(2) A director of a company shall act in good faith in o rder to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of environment.
(3) A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
(4) A director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
(5) A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company.
(6) A director of a company shall not assign his office and any assignment so made shall be void.
(7) If a director of the company contravenes the provisions of this section such direc tor shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
All sections in Chapter XI — Appointment and Qualifications of Directors