Directors role _ As per new Companies Act 2013

The Directors of Indian Companies need to be very cautious while performing the role . Particularly the Directors of listed Public Limited Company & Unlisted Public Limited Company of large size

The way Directors R&R  & the composition of Board is framed & the way Independent Directors is defined , the corporate Governance of Indian Companies is definitely going to improve and will help all the stake holders for better management

To give furthur impetus to the Corporate governance , the new Corporate Governance norms of SEBI will be effective from 1st October 2014

The duties and responsibilities of directors stipulated by the Indian Companies Act of 2013, can broadly be classified into the following two categories: ---

[i] The duties and liabilities which encourage and promote the sincerest investment of the best efforts of directors in the efficient and prudent corporate management, in providing elegant and swift resolutions of various business-related issues including those which are raised through "red flags", and in taking fully mature and wise decisions to avert unnecessary risks to the company.

[ii] Fiduciary duties which ensure and secure that the directors of companies always keep the interests of the company and its stakeholders, ahead and above their own personal interests.
The following duties and liabilities have been imposed on the directors of companies, by the Indian Companies Act of 2013, under its Section 166: ---

• A director of a company shall act in accordance with the Articles of Association (AOA) of the company.

• A director of the company shall act in good faith, in order to promote the objects of the company, for the benefits of the company as a whole, and in the best interests of the stakeholders of the company.

• 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 a 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 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.

• A director of a company shall not assign his office and any assignment so made shall be void.

• If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one Lakh Rupees but which may extend to five Lac Rupees.

INDEPENDENT DIRECTORS

An Independent Director is that member of the board of a company, who does not possess any financial relationship with the company (except the sitting fees), nor can own shares in the company.

The new Indian Companies Act of 2013 dictates that every listed company & certain unlisted Public Limited Company  must contain at least one-third of the total magnitude of its directors, as the independent directors; Companies are  granted a transition period of one year for making strict compliance with this mandatory provision. Again, the independent directors are not permitted to hold office for more than two consecutive terms of five-year periods.

In the new regime, the roles and duties of the independent directors attained significant expansion, and many new other areas have been prudently covered. Broadly, they are intelligently assigned the highly responsible role of the arbiters among various constituencies within the corporation. Hence, the new provisions for the independent directors of the limited companies are certainly very constructive for transparent and sound corporate governance, and are hugely beneficial to the company and its all shareholders. Some of the most significant functions, duties, and liabilities of the independent directors, are the following (as per the Schedule IV of the CA-2013): ---

• To assist in forwarding equitable and independent judgment to the board
• To secure and promote the interests of all stakeholders of the concerned company, particularly of the minority shareholders
• To conciliate and balance the conflicting interests of the stakeholders
• To attend actively and constructively most of the board and committee meetings
• To pay proper and adequate attention to Related Party Transactions (RPTs)
• To report concerns honestly and impartially about any unethical behavior, violation of the code of conduct, or any suspected fraud in the company