It is of the highest importance that auditor's should perform their duties with scrupulous care, skill and vigilance to ensure that no transaction is illegal or improper and if he has reason to believe so, he must report it. The author can be reached at: kundusubhashis legalserviceindia. Is entitled to receive a copy of the statutory report 9. All Business, financial operation and verification of accounts were handled by Managing Director. It won't have any affect till it is been approved by the court.
The power to appoint directors is exercised by the shareholders in First Annual General meeting as per the provisions of Section 255 and regulations in the Articles of Association. Whilst the company directors may call a general meeting at any time for any reason, shareholders can also request a general meeting, subject to conditions ie. Increases the market value of shares B. A debate started all over the country as to whether non executive chairman or part time directors have any liability in such cases. As per Section 308, directors are also required to disclose their shareholding in the company.
The Company works through two main organs, viz. The auditor must take reasonable care to ascertain that books furnished by the company show the company's true position. Keshub Mahindra, for the Bhpoal gas tragedy which resulted in loss of several lives, sent shock waves in the corporate world. In addition a notice convening an annual general meeting must contain a summary of the annual financial statements. The auditor can also require any information or explanation from any officers of the company. Director may be personally liable to any party that has an interest in the affairs of the Company like shareholders, government, regulators, creditors, liquidators, etc. The Draft Companies Rules elaborates the provision in this regard under Clause 11.
But the court is in opinion that the non executive director could not simply rely on the information provided by the management or executive director. Declaration is protected by the business judgment rule c. A mismatch of the final outcome and the expectations of the investors could increase the risks taken by them. In other words, the regulatory authority has, one would submit, acted clearly in excess of its authority or powers; in as much as it has, in a manner of speaking, encroached upon the authority and powers to make any enactment vested only in the constitutional body named, the legislature. The Central Government before making any such order may consult the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949, in regard to the class or description of companies, if the Government thinks it necessary. Thus, the auditor must certify what he does not believe to be true and he must take reasonable care before he believes what he certifies to be true. It is the duty of an auditor that he should verify investments himself while certifying such investments.
However they can reduce the rate of recommended dividend. This post was written by Shirley Fodor during her time as a partner at Jacobson Attorneys As we established earlier in the series, a company is seen as a person in law, who acts by means of its members or shareholders , its directors and its employees. Minority shareholders have same rights as majority shareholders in dividend policies and in accessing new security issues. Specified percentage of outstanding shares declared by the directors ii. Right issue which shareholders hold of a company under Companies Act, 1956 are as follows:- 1 Rights attached to shares of any class can be varied with the consent of shareholders holding not less then 75% of issued shares. Sale of a Control Block of Shares 1. The answer is: By examining the books of the company He must take reasonable care to ascertain that they do.
In addition, shareholders are entitled to pass a resolution relating to the management of the company. The Companies Act gives right of postal voting for certain fundamental decisions. Right issue which shareholders hold of a company under Companies Act, 1956 are as follows:- 1 Rights attached to shares of any class can be varied with the consent of shareholders holding not less then 75% of issued shares. If there is fraud on his part, the auditor will be liable in tort. If not, then he is liable for breach of fiduciary duties.
Minutes of board meetings and records of action 3. It is responsibility of Director to identify deficiencies wherever possible by employing verification and scrutiny. Sections 297, 299 and 300 of the Companies Act, 1956 elaborate on conflict of interest transactions, and require disclosure of conflicts by directors and their abstention from meetings at which conflicted transactions are discussed and from voting on them. The company will decide what rights will attach to the different classes of shares. Payment of dividend is the prerogative of the board Duties of Directors Directors as individuals have a duty to attend board meetings and contribute to the deliberations of the board and ultimately to the decision making leading to formulation of policies. The only provision which deals with minority Squeeze-Outs is section 395 of the old Act. It is the duty of an auditor that he should not adopt foul means over the shareholders to get himself appointed as an auditor and maintain his office at two places to defraud others.
Usurping a corporate opportunity D. The rights of shareholders are fixed which can't be altered unless the Companies Act gets modified. Sale of all or substantially all of the assets 6. Copyright 2007-2019 by Interview Questions Answers. Introduction The Companies Act 1956 is administered by the Government of India through the Ministry of Corporate Affairs and the Offices of Registrar of Companies, Official Liquidators, Public Trustee, Company Law Board, Director of Inspection, etc. Contrast this with the position in other jurisdictions such as Delaware, the leading state for corporate law in the U. Simply stated the following are the duties of Directors.
Whilst directors are responsible for the day to day management of the company and making decisions, the shareholders have specific roles and duties in relation to their control over the company. All companies must have at least one shareholder. If a breach of duty is to be attributed to a Board on basis that board member were present at a meeting which had approved a wrongful act, then the liability of each Director is joint and several. The court has in deciding the liability of Directors, taken into consideration Director Position as a whole. Auditors can be removed by the members of the company by passing a resolution at the general meeting. The notice periods vary from 15 days to 21 days depending on the type of resolutions to be passed.
This promotes economic growth through: Enhancing savings and capital formation Channelising these into real investments Improving the efficiency of capital allocation since capital flows into more productive uses Research studies point out that countries with well-developed financial markets regulated by laws, allocate investment across industries more in line with growth opportunities. This could adversely impact the overall investment climate in the country and slow down economic growth of the country. Powers which can be exercised only at Board meeting by means of passing of resolutions Section 292 · power to make calls on shareholders in respect of money unpaid on their shares · power to issue debentures · power to borrow moneys otherwise than on debentures · power to invest the funds of the company · Power to make loans Certain restrictions can be imposed on general powers of the Board and invariably they have to seek the approval of shareholders in the General meetings in such cases. So the Company is liable for contracts in which Director enter into. Receipt of a specified number of shares in exchange for each share currently owned ii. To achieve high level of performance, they must set the goals of the company.