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Alok Vashishth (Sr. Manager)     11 January 2011

Director's role in a pvt ltd company

Hi,
I would have following queries:
1. Does Managing Director of a pvt ltd company have any special rights ?

2. Is it possible to appoint a new director in a pvt ltd company without board of director resolution

3. Is it possible for a founding director (Managing Director) to transfer the business/ assets of a company to another company without written consent/ resolution from other founding directors.

Thanks
Alok



Learning

 14 Replies


(Guest)

(1) Rights, Powers, Responsibilities, liabilities are all fixed by the Board of Directors while appointing the M.D. if the same are not present in the Articles of Association registered with the ROC. Generally in public limited companies, if anything is not said in the Articles of Association, Table A of the Companies Act is applicable but not in your case, since it's a Pvt. Ltd., Co.,

(2) A new Director cannot be appointed without a Board Resolution.

(3) An M.D. has no exclusive right to transfer Company's assets to another company without any authority to do so.

1 Like

Alok Vashishth (Sr. Manager)     11 January 2011

(2) A new Director cannot be appointed without a Board Resolution.

- Is it possible to do it through EGM

(3) An M.D. has no exclusive right to transfer Company's assets to another company without any authority to do so.

- Is it possible to do it through EGM


(Guest)

Pls tell your whole problem exactly and then ask for legal remedy. I can give answers with reference to Cos. Act and other authorities.

R.venkatesh Naidu (.)     12 January 2011

Yes Mr. Gurunarayanarao's statement is correct.  dear client please tell elaborately that what is your company's rules and regulations, then you ask your doubts.

Alok Vashishth (Sr. Manager)     13 January 2011

Hi,

I am a director and shareholder in a pvt ltd company. Only other director has appointed his wife a director through EGM. EGM never happened and I have no information of the appointment. Also, he alloted shares to me without any EGM or Board of director resolution

I came to know about the appointment only from ROC website based.

Is his action as per companies' act. What remedy I have now.

I hope, it helps now to answer my query properly.


(Guest)

What I infer from your query is that a rival group has been formed in your company defeating your rights and powers as a director. This is of a serious nature and cannot be simply brushed aside. A new incumbent director cannot suddenly be appointed in an EGM. Firstly, there should be a Board meeting and the need for an EGM has to be discussed and agenda should be framed. Notice of not less than 21 days has to be sent to all the shareholders. The Attendance has to be taken in the EGM and Voting should be held for passing any resolution. There are several other formalities which have to be followed. Hence you cannot be avoided by your co-director and he cannot keep you in dark about all these events. The Companies Act which is highly technical in nature, should be punctually adhered to. Hence if you are aggrieved or not consulted as a director, you have every right under the Act to Challenge it before the Company Law Board / High Court having territorial jurisdiction, as the case may be. But you should first send a legal notice to your co-director and the new incumbent director, before moving the Court of Law.

1 Like

sanjay kumar (BE/ LLM in Corporate Laws)     19 January 2011

There are no specific rules or laws about what a MD can do or cannot do in a company. The rules and laws of a company are governed by its Memorendum of Association and Articles of Association.  The MOA and AOA are registered with ROC at the time of incoporation of the company under The Company's Act,1956. Any amendment in MOA and AOA can be carried out by passing special resolution in AGM/EGM and notifying the ROC about the amendment.

Coming to your questions,

1. An MD can have only those special rights which have been vested onto him in MOA/AOA. No other special rights can be enjoyed by an MD or any Director.

2. No. It is not possible to appoint any Director without the consent of BOD as well as other Members,if any, of the company.

3.The MD of a company has a ficuciary position only. He cannot act as owner or sole proprietor of a company. For transferring/selling/acquiring any/all assets of a company, the consent of majority of BOD/ Members is necessary. The MD/Director/Other member is free only to sell his shares in the company.

Regarding the other Director appointing his wife as third Director in the company through an EGM without serving a Notice to you about EGM and its agenda is unlawful. You can sue the company as well as the other Director for Oppression. 

1 Like

Alok Vashishth (Sr. Manager)     19 January 2011

Will complain to ROC help or do I need to go to CLB ??

Alok Vashishth (Sr. Manager)     19 January 2011

Hi,

Can anyone please suggest a good company lawyer who can help me out in this. It should cost less both in time and money. I am looking for a quick petition filing and legal action on the director.

Thanks

sanjay kumar (BE/ LLM in Corporate Laws)     19 January 2011

You can file a complaint with ROC in the first instance. But before that you have to check up with MOA/AOA of your company. If ,prima-facie, the MOA/AOA has been flouted, the ROC may ask for an explanation.

As regards a good lawyer, that will depend upon your city and state because litigation can be a costly affair.

The other alternative to you is that if the MD has acted beyond his powers, you can also file for winding up of the company with the ROC/Court of Law.


(Guest)

Mr.Sanjay Kumar, if you know about the Company Law, answer this query. Pls don't mislead the querist with your limited knowledge.


(Guest)

(1) Mr.Alok, you may seek the removal of the erring director(s).

(2) You may enquire about a good lawyer in Company Law by visiting the CLB or the High Court (Company Bench) of your city and ask the Court staff as to who are all Lawyers/Company Secretaries (A.C.S.) regularly appearing in the Company Bench. The practising Company Secretaries are professionals who can appear before the Company Law authorities upto the level of CLB only and would charge less.

Randhir Kumar (Advocate-On-Record High Court Patna )     29 May 2012

web search - "RANDHIRVAKIL" 

Randhir Kumar (Advocate-On-Record High Court Patna )     29 May 2012

Name Randhir Kumar Address High Court , Patna , A-O-R. NO.- 05361 Phone Consulting +919801700999 City Sitamarhi Meet this Lawyer Area Virtual Advocacy Experience (in years) 07 Educational Background B.Com , LL.B. Practice Court High Court ,Patna , Supreme Court of India along President of India & other countries Specialization General ( Any Legal Matter )


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