CHALLENGES & IMPLEMENTATION:
Company
being an artificial person it requires certain natural persons to represent the
company at various fronts. The position of directors in their relationship to
the company is not only as the agents, but also trustees of the company
Executive Director: The term
executive director is usually used to describe a person who is both a member of
the board and who also has day to day responsibilities in respect of the
affairs of the company. Executive directors perform operational and strate gic
business functions such as:
• Managing people
• Looking after assets
• Hiring and firing
• Entering into contracts
Executive directors are usually
employed by the company and paid a salary, so are protected by employment law.
Examples of executive directors are
production director, finance director or managing director or whole time
director.
Section 2(26) of the Companies Act,
1956 defines Managing Director as - "managing director" means a
director who, by virtue of an agreement with the company or of a resolution
passed by the company in general meeting or by its Board of directors or, by
virtue of its memorandum or articles of association, is entrusted with
[substantial powers of management] which would not otherwise be exercisable by
him, and includes a director occupying the position of a managing director, by
whatever name called.
Provided that the power to do
administrative acts of a routine nature when so authorised by the Board such as
the power to affix the common seal of the company to any document or to draw
and endorse any cheque on the account of the company in any bank or to draw and
endorse any negotiable instrument or to sign any certificate of share or to
direct registration of transfer of any share, shall not be deemed to be included
within substantial powers of management:
Provided further that a managing
director of a company shall exercise his powers subject to the Superintendence,
control and direction of its Board of directors;
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