Management – Company Law – Dibrugarh University – Semester 2 (CBCS)

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  • On incorporation, a company becomes a person in the eyes of law, it has a perpetual succession, its members may come and may go but the company lives till its death as aforementioned.
  • It has a common seal, which is affixed on all the legal documents executed on behalf of the company in the presence of and signed by authorised signatory or signatories.
  • It can sue others and can be sued by others in its own name. 
  • It has no physical existence.
  • It has no eyes to see, no ears to hear, no hands to sign and execute documents, no brain to think and no nerves to communicate among its various limbs.


In order to enable a company to live and to achieve its objectives as mentioned in the objects clause of its Memorandum of Association, it has necessarily to depend upon some agency, known as Board of directors. 

  • The Board of directors of a company is a nucleus, selected according to the procedure prescribed in the Act and the Articles of Association.
  •  Members of the Board of directors are known as directors, who unless especially authorised by the Board of directors of the Company, do not possess any power of management of the affairs of the company.
  • Acting collectively as a Board of directors, they can exercise all the powers of the company except those, which are prescribed by the Act to be specifically exercised by the company in general meeting. 
  • The directors of a company are its eyes, ears, brain, hands, nerves and other essential limbs, upon whose efficient functioning depends, the success of the company.
  • The directors formulate policies and establish organisational set up for implementing those policies and to achieve the objectives as, contained in the Memorandum, muster resources for achieving the company objectives and control, guide, direct and manage the affairs of the company.  
  • The Companies Act, 2013 does not contain an exhaustive definition of the term “director”. Section 2 (34) of the Act prescribed that “director” means a director appointed to the Board of a company. 
  • Section 2 (10) of the Companies Act, 2013 defined that “Board of Directors” or “Board”, in relation to a company, means the collective body of the directors of the company.


Second Proviso to section 149 provides that such class or classes of companies as may be prescribed in Companies (Appointment and Qualification of Directors) Rules, 2014, shall have at least one woman director. 

Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014, prescribes the following class of companies shall appoint at least one woman director-  

 (i) every listed company;  

 (ii) every other public company having :-  

 (a) paid–up share capital of one hundred crore rupees or more; or  

 (b) turnover of three hundred crore rupees or more . 

A company, which has been incorporated under the Act and is covered under provisions of second proviso to sub-section (1) of section 149 shall comply with such provisions within a period of six months from the date of its incorporation:  

However any intermittent vacancy of a woman director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy whichever is later.  

Explanation.- For the purposes of this rule, it is hereby clarified that the paid up share capital or turnover, as the case may be, as on the last date of latest audited financial statements shall be taken into account

Director elected by Small Shareholders- Section 151

According to section 151 of the Act every listed company may have one director elected by such small shareholders.  

For the purpose of this section, “small shareholder” means a shareholder holding shares of nominal value of not more than twenty thousand rupees or such other sum as may be prescribed.


First Director 

The first directors of most of the companies are named in their articles. If they are not so named in the articles of a company, then subscribers to the memorandum who are

individuals shall be deemed to be the first directors of the company until the directors are duly appointed. 

In the case of a One Person Company, an individual being a member shall be deemed to be its first director until the director(s) are duly appointed by the member in accordance with the provisions of Section 152. 

General provisions relating to appointment of directors 

 1. Except as provided in the Act, every director shall be appointed by the company in general meeting. 

 2. Director Identification Number is compulsory for appointment of director of a company. 

 3. Every person proposed to be appointed as a director shall furnish his Director Identification Number and a declaration that he is not disqualified to become a director under the Act. 

 4. A person appointed as a director shall on or before the appointment give his consent to hold the office of director in physical form DIR-2 i.e. Consent to act as a director of a company. 

5. Articles of the Company may provide the provisions relating to retirement of the all directors. If there is no provision in the article, then not less than two-thirds of the total number of directors of a public company shall be persons whose period of office is liable to determination by retirement by rotation and eligible to be reappointed at annual general meetings.

Further independent directors shall not be included for the computation of total number of directors. At the annual general meeting of a public company one-third of such directors for the time being are liable to retire by rotation, or if their number is neither three nor a multiple of three, then, the number nearest to one third, shall retire from office. The directors to retire by rotation at every annual general meeting shall be those who have been longest in office since their last appointment.


Procedure for application for allotment of DIN – Section 153 & Rule 9 

 (1) Every individual, who is to be appointed as director of a company shall make an application electronically in Form DIR-3 (Application for allotment of Director Identification Number) to the Central Government for the allotment of a Director Identification Number (DIN).  Studynama

(2) The Central Government shall provide an electronic system to facilitate submission of application for the allotment of DIN through the portal on the website of the Ministry of Corporate Affairs. 

 (3)  (a) The applicant shall download Form DIR-3 from the portal, fill in the required particulars and attach photograph; proof of identity; proof of residence; and verification by the applicant in Form DIR-4, specimen signature duly verified and sign the form digitally. 

 (b) Form DIR-3 shall be signed and submitted electronically by the applicant using his or her own Digital Signature Certificate and shall be verified digitally by -: 

 (i) a chartered accountant in practice or a company secretary in practice or a cost accountant in practice; or 

 (ii) a company secretary in full time employment of the company or by the managing director or director of the company in which the applicant is to be appointed a director;



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