DUTIES OF DIRECTORS OF PRIVATE LIMITED COMPANY
Once you register a private limited company in India and get the incorporation certificate, you need to ensure that everyone in your team is accountable for the work. Most important person in a Private Limited company is the Director. Though a director can officially under take any and all tasks he wants to there are certain duties that are required to be performed by a Director as per Indian Laws. Below we will discuss the duties of directors of private limited company as per the Companies Act, 2013.
Duties of Directors of Private Limited Company
- Section 166 of the Companies Act 2013 provides that a director of a company (including a private company) shall act in accordance with the Articles of the company.
- A director of a company 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, its employees, the shareholders, community and for the protection of environment.
- A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
- A director of a company shall not involve in a situation in which he may have direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
- 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.
- A director of a company shall not assign his office and any assignment so made shall be void.
Disclosure of Interest by Directors
Amongst the various duties of directors of private limited company one important duty is mentioned in Section 184 of the Companies Act 2013 which provides for disclosure of interest by every director. He has to disclose his interest in any company, corporate body, Firm, LLP, or other association of Individuals and his share holding (exceeding the limit of 2% specified in section 184(2)in the prescribed manner.
It is also provided that he cannot participate in the meeting where any contract or arrangement is considered. The provisions of New Section 184 apply to private Companies also.
If any director contravenes this provision he will be punishable with imprisonment for a term which may extend to one year or with minimum fine of Rs.50000/- which may extend to Rs.1,00,000/- or with both.
Report of Board of Directors
New Section 134 provides that Board of directors shall approve the financial statements, including the consolidated financial statement, before submission of the same to auditors for their report. It is also provided that the Board of directors shall prepare its report and attach auditor’s report and board’s report to the financial statements before placing the same before the Annual General Meeting.
This article on duties of directors of private limited company has another part which will be published in due course. Stay updated with various legal compliance in India with RegistrationsIndia.com