Do You Want to Know the Responsibilities of a Director?

A Director of a Company is a part of Senior management of the company. The Director is responsible to work for achievement of Organisation’s goals. The duties and responsibilities of Director are prescribed in the Companies Act, 2013 (“the Act”). However, the Director is charged with the duties other than those mentioned in the Act to run the company effectively. Being a Director, if you want to know your duties and responsibilities then this article is meant for you.

1. Duties of Director as per the Act

Director is required to:

Act in benefit of the company
To promote the objects of the Company
Act for achievement of the goal of the company in benefit of the members
Act in the interest of the company, its employees, shareholders, the community and for the protection of environment
Exercise his duties with due and reasonable care, skill and diligence
Should exercise independent judgement
Should not involve in a situation in which there may arise direct or indirect conflict with the interest of the company
Should not achieve/try to achieve any undue gain or advantage to himself/herself or his/her relatives, partners or associates
Should not assign his/her office

2. Other responsibilities and duties of Director

Although, the duties of Director are mentioned in the Act, but a Director is expected to perform other duties and responsibilities being a Director.

A Director should:

Have general knowledge and skills and experience to carry out the functions of a director.
Avoid any relation with the competitors of the Company
Should take part in induction program before joining the company as a Director.
Should be well informed about the regulatory environment of the Company
Be equipped with the knowledge of running the business effectively and efficiently
Prepare the budgets and plans for the business
Avoid personal interests while performing duties as a Director
Other duties as may be reasonably require to run the company.

3. Is there any penalty for not performing duties?

Yes, if a Director does anything in contravention of the duties mentioned in the Act, then he/she is punishable with a fine of minimum Rs. 1 lakh and maximum Rs. 5 lakh.

4. Conclusion

A director runs the company as most of the decisions in a company are taken by Directors in Board Company which may include subsequent approval of members of the Company and thus performs the pivotal role in conduct of the activities of the Company. Therefore, he should act in the interest of the company, its members, shareholders and also for the benefit of the society. If there is any lack in performing duties or negligence on part of the Director then there are stringent provisions in the Act to punish the errant Directors and protect the Company and its stakeholders.

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