Mentioning Director Identification Number (DIN):
Every Director while signing any document in the capacity of Director shall mention his/ her Director Identification Number along with address as provided to the Ministry of Corporate Affairs.
Duties of Directors:
It is the very first time that the Companies Act, 2013 has specifically mentioned the duties of Directors. In order to induce greater level of transparency and accountability, the following duties have been prescribed for a Director:
- To act in good faith and in the best interests of the company, its employees, the shareholders, community and for the protection of the environment
- Not to involve in a situation that presents a conflict of interest
- To act in accordance with the Articles
- Not to achieve any undue gain or advantage (and to return any equivalent amount to the company if such gain or advantage is indeed made)
- To exercise due and reasonable care, skill and diligence, and exercise independent judgment
- Not to assign or delegate his office
No loans to Directors
No Director or Director’s relatives can take any loan from any Company whether public or private.
No company can grant any loan to any firm in which Director or Director’s relatives is a partner.
Evaluating performance of a Director
The Independent Director now needs to hold atleast one Board Meeting to evaluate the performance of non-independent Directors. Further, even the non-independent Director will have to evaluate the performance of Independent Director(s) for the duties performed during the year. The broad guidelines on Board evaluation are stated in the Act.
Disclosure and non-disqualification by Directors
Every Director shall disclose his interest in other companies or body corporate(s), firms, or other association of individuals to every company in which he is a Director at the beginning of each financial year, and whenever there is any change in the disclosed interest.
Enhanced coverage of Related Party Transaction (RPT)
The ambit of related party transaction has been increased now. Every related party transaction shall be disclosed to the Board and Members in Board Report.
Since the definition of “Related Party” has also been modified, hence, every transaction entered with any “Related Party” needs to be analyzed keeping in mind the related compliances.
Limit on the number of Directorship
An individual can be a Director in maximum of 20 companies out of which not more than 10 should be public limited companies. In case, at present, a person is a Director in more than 20 companies, he should choose which 20 companies he will stay as a Director within one year from 01st April, 2014 and from the rest he needs to resign before 31st March, 2015.
Hope the above information provides an insight of the compliances which are required to be complied by the Company before the end of FY 2014-15.
We believe our updates in past have been useful to you in getting to know the compliance’s well and our endeavor has helped you take more informed decisions. We’ll continue to send you more useful updates as we’ve been doing it past. We would also like to extend our thanks to those who have been writing us back with their suggestions and comments.
Wishing you all ‘Merry Christmas’ and a very ‘Happy and successful New Year’
You may get back to us for any more details on above provisions or any other matter related to Companies Act, 2013 at below mentioned contact details-
Malavika Bhatia | <malavika.bhatia@bluelotusstrategy.com>
Monika Bhardwaj | <monika.bhardwaj@bluelotusstrategy.com>
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