Notes On Powers And Duties Of Managing Director:

Duties of the Managing Director:

1. Fiduciary Duties:

      It includes the duties of good faith and honesty between the Managing Director and the company and the trustees. These duties are imposed upon the Managing Director by the terms of the law so as to forbid them from capitalising their strategic position in the company and serve their own vested interest.

2. Duty of Care:

      The Managing Directors of the company are expected to perform their functions with responsibility, caution and attentions. They are indeed expected to discharge their duties and obligations skillfully and delegations (if any), is to be made to responsible persons of knowledge and experience.

3. Duties towards the Individual Members:

      It is to be noted that the directors are obligated for their duties towards the company and not to the individual members. Therefore, the directors who purchases shares from members of their company are under obligation to disclose informations

4. Discloser of Personal Interest:

      The relationship between the directors and company is that of an Agent and Principal. The law expects a Managing Director to discharge his duty towards the company without any personal interest of his own.

5. Duty to Attend Board Meeting:

      Though the Managing Directors are not found to attend all board meetings, section 283 of the Companies Act states that office of the Managing Director shall stand vacant if the Director absents himself from attending consecutive meeting of the Board.

6. Duty towards Third Party:

      There is no denying the fact that directors are not personally liable for the contract entered into with the third party by the company. If the contract entered into by the company is beyond the company's power, even then; the directors shall not be liable.

Powers of the Managing Director:

      According to section 291 of the Companies Act 1956, the powers of the Managing Directors are as follows:

I. General Power:

      Subject to the provisions of the Act, the Managing Directors of the company is authorised to implement or convey all such powers and do all such acts as he is authorised to do so.

II. Specific Powers:

      The Directors of the company are specifically empowered to:

  1. Supervise, control and direct the affairs of the company.
  2. Dispose of the shares which are ready for issue
  3. Appoint auditor within one month of registration.
  4. Fill up the vacancies in the office
  5. Appoint additional directors if authorised by the articles

III Powers to be exercised only at the Board Meetings:

      According to section 292, the following powers can be exercised by the Directors at the Board Meeting:

  1. Power to make calls on the shareholders
  2. Power to issue debentures
  3. Power to extend loans
  4. Power to borrow money
  5. Power to invest funds of the company.

IV Additional Powers:

      The following are the additional powers of the Director of the Company:

  1. To appoint a person as manager, if he is already a manager of another company.
  2. Power to declare solvency of the company in case of winding up.
  3. Receiving notice of discloser of Directors interest.
  4. Receiving notice of discloser of Directors share holdings
  5. To make investment in companies in the same group