Rights of Director

Rights of Director

Rights can be categorized into individual rights and collective rights.

Individual rights are such as

(i) Right to inspect books of accounts

(ii) Right to receive notices of board meetings

(iii) Right to participate in proceedings and cast vote in favour or against resolutions

(iv) Right to receive circular resolutions proposed to be passed

(v) Right to inspect minutes of board meetings.

Collective rights are as follows

(i) Right to refuse to transfer shares: Directors of private companies and deemed public companies are entitled to refuse registration of transfer of shares to a person whom they do not approve.

(ii) Right to elect a Chairman: The directors are entitled to elect a chairman for the board meetings.

(iii) Right to appoint a Managing director: The Board has the right to appoint the managing director/ manager of the company.

(iv) Right to recommend dividend: The Board is entitled to decide whether dividend is to be paid or not. Shareholders cannot compel the directors to pay dividend. However they can reduce the rate of recommended dividend. Payment of dividend is the prerogative of the board