The duties of the directors can be broadly classified as-
- Statutory duties, and
- Non-statutory duties.
Statutory Duties of a Director
A number of statutory duties are expected to be performed by the directors of a company. Some of them are discussed below:
1. The Board of Directors have to supervise, control and direct the Managing Director and Manager.
2. The board has to see that in the case of fresh issue all moneys received from applicants for shares are deposited in a scheduled bank till the minimum subscription is received or till the certificate of commencement of business is obtained.
3. It has to see that no misleading statement is given in the prospectus.
4. Every director should pay the application and allotment money before the commencement of business.
5. The Board has to prepare the statutory report and arrange for the statutory meeting within the time limit.
6. It must convene extraordinary general meeting as and when required.
7. It has to approve the annual accounts.
8. It has to recommend dividends.
9. Every director must obtain the qualification shares, if so required.
10. Every director who is interested in any contract must disclose his interest to other directors.
11. Every director must disclose his shareholding in the company.
12. It has to make a declaration of solvency of the company at the time of member’s voluntary winding up.
Non-Statutory Duties of Directors
The following are some of the non-statutory duties of directors.
1. Duty to Keep the Fiduciary Relationship: We have already seen that the director is having a fiduciary relationship with the company. As such, he should act honestly. Whatever he does it should be for the benefit of the company. He should not make any secret profits in his dealings on behalf of the company.
2. Duty to Take Care and Skill: Since the director is in a responsible position, the shareholders expect him to perform his functions with reasonable care. The functions to be performed by him should be attended with due care and diligence.