Tag: TN Board 12th Commerce Important Questions Chapter 27

TN State Board 12th Commerce Important Questions Chapter 27 Company Management

Question 1.
Define Director.
Answer:
The companies act 2013 section 2(34) defines a director appointed to the board of company is “ A person who is appointed or elected member of the board of directors of a company and has the responsibility of determining and implementing policies along with others in the board. It is not necessary, to hold any shares in the company or be an employee. Directors act on the basis of resolutions made in the board of directors meeting according to their powers stated in the articles of association of the company”.

Question 2.
Name the companies required to appoint KMP.
Answer:

Requirement to appoint “KMP”:
(i) Every listed
(ii) Every public company(Having paid up share capital of ₹ 10 crore or more).

Question 3.
Who is whole time Director?
Answer:
A director is one who devotes whole of his time of working hours to the company and has a significant personal interest in the company as the source of his income.

Question 4.
Who is called as Managing Director?
Answer:
A director is one who is employed by the company and has substantial powers of management over the affairs of the company subject to superintendence direction and control of the board.

Question 5.
Who can be Executive Director?
Answer:
An executive director is a chief executive officer (CEO) or managing director of an organization, company or corporation who is responsible for making decisions to complete the mission and for the success of the organization. In the globalized business world the title of president or of chief executive officer is used instead of managing director.

Question 6.
Differentiate Executive and Non-Executive Directors.
Answer:

Executive Director	Non – Executive director
An executive director can be either a whole time director of the company or a managing director.	Non – executive director is a director who is neither a whole time director nor a managing director.
He is responsible for making decisions to complete mission and for the success of the organization.	Non – executive director’s responsibilities include the monitoring of the executive directors and acting in the interest of the company shareholders.

Question 7.
When are alternative directors appointed?
Answer:
Alternate director is appointed by the board of directors, as a substitute to a director who may be absent from India for a period which is not less than three months. The appointment must be authorized either by the articles of association of the company or by passing a resolution in the general meeting.

Question 8.
Who is a shadow director?
Answer:
A person who is not the member of board but has some power to run it can be appointed as the director but according to his/her wish. A shadow director is a person in accordance with whose directions or instructions the directors of a company are accustomed to act.

Question 9.
What is causal Vacancy?
Answer:
Vacancy arising due to death of director, his resignation or insolvency and not by efflux of time or retirement by rotation. Failure an elected director to accept the office may also constitute a casual vacancy.

Question 10.
State the minimum number of Directors for a Private company.
Answer:

1. In case of one person company – the requirement of directors is one.
2. Other private companies – the minimum requirement of directors is two. B.

Question 11.
Who are the KMP?
Answer:
The definition of the term key managerial personnel is contained in section 2(51) of the companies act 2013. This section states

1. The chief executive officer
2. The managing director or the manager
3. The company secretary
4. The whole-time director
5. The chief financial officer and
6. Such other officer as may be prescribed.

Question 12.
Explain composition of the board of directors.
Answer:
General optimum combination:
Board of directors shall have an optimum combination of executive and non-executive directors with at least one woman director and not less than fifty percent of the board of directors shall comprise of non-executive directors.

When the non-executive director is the chair person:
In this case, at least one third of the board of directors shall comprise of independent directors and where the company does not have a regular non-executive chairperson, at least half of the board of directors shall comprise independent directors.

When the non-executive chairperson is a promoter or is related to any promoter or person occupying management positions at the level of board of director or at one level below the board of directors. In this case, at least one half of the board of directors of the company shall consist of independent directors.

Question 13.
Brief different types of Directors.
Answer:
Residential director:
According to section 149(3) of companies act 2013, every company should appoint a director who has stayed in India for a total period of not less than 182 days in the previous calendar year.

Independent director:
According to section 149(6) an independent director is an alternate director other than a managing director who is known as whole time director or nominee director.

Small shareholders directors:
small share holders can appoint a single director in a listed company. But this action needs a proper procedure like handling oyer a notice to at least 1000 share holders or 1/10 of the total share holders.

Nominee director:
A director nominated by any financial institution in pursuance of the provisions of any law for the time being in force or of any agreement or appointed by any government or any other person to represent its interests.

Women director:
As per section 149(1) (a) there are certain categories according to which there should be at least one woman as a director on the board.

Additional directors:
Any individual can be appointed as additional directors by a company.

Alternative directors:
Alternative director is appointed by the board of directors, as a substitute to a director who may be absent from India for a period which is not less than three months.

Shadow director:
A person who is not the member of board but has some power to run it can be appointed as the director but according to his/her wish.

Question 14.
State the qualification of Directors.
Answer:
In general a director shall possess appropriate skills, experience and knowledge is one or more fields of finance, law, management, sales marketing administration, research corporate governance, technical operations related to company business. According to the different provisions relating to the directors the following qualifications may be mentioned.

1. A director must be a person of sound mind
2. A director must hold share qualifications of the article of association . provides such
3. A director must be an individual
4. A director should be a solvent person
5. A director should not be convicted by the court for any offence etc.

Question 15.
List the disqualification of a directors.
Answer:
Section 164 of companies Act 2013, has mentioned the disqualification as mentioned below
A person shall not be capable of being appointed director of a company if the director is

1. Of unsound mind.
2. An undercharged insolvent.
3. Has been convicted by a court for any offence involving moral turpitude and sentenced in respect there of to imprisonment for not less than six months.
4. Has not paid any cell in respect of shares of the company held by him, whether alone or jointly with others.
5. An order disqualifying him for appointment as director has been passed by a court in pursuance of section 203.
6. He has been convicted of the offence dealing with related party transactions under section 188.
7. He has not got the director identification number.

Question 16.
Explain how director of a company can be removed from the office.
Answer:
A director of company can be removed from his office before the expiry of his term by.
(a) Removal by share holders:
A company (whether public or private) may by giving a. special notice and passing an ordinary resolution, remove a director before the expiry of his period of office without the proof of mismanagement, breach of trust, misfeasance or other misconduct on the part of the director. If the shareholders feel that the policies pursued by the director are not appropriate, then director can be removed.

(b) Removal by the Central Government:
The central government has been empowered to remove managerial personnel from office on the recommendation of the company law board under the following circumstances.
(i) Where a person concerned in the conduct and management of the affairs of a company has been guilty of fraud, misfeasance, persistent negligence in carrying out his obligations.
(ii) Business company managed by a person inaccordance with sound business principles or prudent commercial practices.
(iii) A person in a manner which is likely to cause injury or damage to the interest of trade industry or business.
(iv) A person with the intent to defraud its creditors, members or any other person.

(c) Removal by the company law board:
If an application has been made to the company law board against the oppression and mismanagement of the company affairs by a director, then the company law board may order for the termination of the directors tenure.

Question 17.
What is the maximum limit for the Managerial remuneration?
Answer:
Managerial remuneration is payable to a person appointed as 196 of the Act. The term remuneration means any money or its equivalent given or passed to any person for services rendered by him and include perquisites.

Maximum remuneration payable by a company to its managerial personnel:
Remuneration payable by a company in case where is’no profit or inadequacy of profit without central government and to pay remuneration in excess of the above limit is detailed below.

Question 18.
What are the duties of a directors?
Answer:
Collective duties of directors:
Directors as a part of board perform certain duties collectively. The following are some of those duties exercised collectively.

1. Approval of annual accounts and authentication of annual accounts
2. Appointment of first auditors
3. Issue of notice and holding of board meetings and shareholders meetings or by circulations.

General duties of Directors:

1. Structuring or new policy to reach the objectives of a company
2. Issuing instructions to employees for implementation of policy to review company’s progress
3. Appointing their subordinates like managing director, manager, secretary and other employees.

Specific duties of directors:

1. Duty to disclose his name, address and occupation
2. Duty to hold minimum qualification shares within two months after his appointment.
3. Duty to issue prospectus and fix the minimum subscription
4. Duty to take care that prospectus should not contain any false or misleading statement
5. Duty to forfeit and transfer shares
6. Duty to call on a extraordinary general meeting if necessary
7. Duty to call statutory and annual general meeting of the company.

Question 19.
State the powers of the directors.
Answer:
The power of the Directors are grouped into four different heads.
Statutory powers of Directors:

1. Power to make calls on shareholders in respect of money unpaid on their shares
2. Power to issue debentures
3. Power to borrow moneys otherwise than on debentures.
4. Power to make loan
5. Power to approve financial statement and board reports

Managerial powers of Directors:

1. Power to contract with the third party.
2. Power to allot forfeit or transfer shares of company
3. Power to decode the terms and conditions to issue debentures
4.  Power to appoint manager, managing director, secretary of the company
5. Power of control supervision of work of subordinates

Power only with a resolution:

1. To sell or lease any asset of the company
2. To allow time to the Director for repayment of the loan
3. To appoint a sole agent for more than 5 years.
4. To issue bonus shares and for reorganization of share capital

Other powers:

1. Power to fill casual vacancy
2. Power to remove key managerial personnel
3. Power to declare solvency position of the company (iv) Power to make political contribution.

Question 20.
State the Criminal liabilities of Directors.
Answer:
Directors will be liable with a fine and imprisonment or both for fraud of non-compliance of any statutory provisions in the following situations where:

1. There is mis-statement in prospectus
2. There is failure to file return on allotment with the registrar.
3. There is failure to give notice to the registrar for conversion of share into stock.
4. There is failure to issue share certificate and debenture certificate
5. There is default in holding annual general meeting
6. There is failure to provide financial statement
7. There is failure to maintain, registrar of the members and registrar of debenture holders.

Choose the correct answer:

Question 1.
A person Shall hold office as a director in ________ companies as per the Companies Act, 2013.
(a) 5 companies
(b) 10 companies
(c) 20 companies
(d) 15 companies
Answer:
(c) 20 companies

Question 2.
Which _________ Director is appointed by a Financial institution.
(a) Nominee
(b) Additional
(c) Women
(d) Shadow
Answer:
(a) Nominee

Question 3.
A Private Company shall have a minimum of:
(a) Seven directors
(b) Five directors
(c) Three directors
(d) Two directors
Answer:
(d) Two directors

Question 4.
A Public Company shall have a minimum of _________ Directors.
(a) Twelve
(b) Seven
(c) Three
(d) Two
Answer:
(c) Three

Question 5.
A Public Company having a paid up Share Capital of ₹ _________ or more may have a Director, elected by such small shareholders.
(a) One
(b) Three
(c) Five
(d) Seven
Answer:
(c) Five

Question 6.
Under the companies Act, which one of the following powers can be exercised by the Board of Directors?
(a) Power to sell the company’s undertakings.
(b) Power to make call.
(c) Power to borrow money in excess of the paid up capital.
(d) Power to reappoint an auditor.
Answer:
(b) Power to make call.

Question 7.
Which director need not hold qualifying shares?
(a) Directors appointed to Central Government
(b) Directors appointed to Shareholders.
(c) Directors appointed to Managing Director
(d) Directors appointed to Board of Directors
Answer:
(a) Directors appointed to Central Government

Question 8.
What is the statue of Directors who regulate money of the company?
(a) Banker
(b) Holder
(c) Agent
(d) Trustees
Answer:
(d) Trustees

Question 9.
According to Companies Act, the Directors must be appointed by the:
(a) Central Government
(b) Company Law Tribunal
(c) Company in General Meeting
(d) Board of Directors
Answer:
(c) Company in General Meeting

Question 10.
The Board of Directors can exercise the power to appoint directors in the case of:
(a) Additional Directors
(b) Filling up the Casual vacancy
(c) Alternate Directors
(d) All the above
Answer:
(d) All the above

TN Board 12th Commerce Important Questions