Is Directorship under Private Limited Company a status or responsibility

Directors have a number of responsibilities under the Companies Act, 2013, non compliance of which give rise to the fine, disqualification or even imprisonment also. These are as follows:

 1.     Maintaining Books of Accounts-Maintenance of books of accounts would mean books maintained by the company to record the specified financial transaction. Every company is required to prepare books of accounts and other relevant books and papers for every financial year. It shall be prepared on accrual basis and shall give a true and fair view of the affairs of the Company. These books may be kept in electronic mode. Such books of accounts and other relevant papers are generally kept at the registered office. However these can be kept at any other place in India with the approval of Board of Directors and intimation in prescribed form will be given to Registrar of Companies within 7 days of such decision.

2.     Board Meetings-Directors must ensure that board meeting are held on a regular basis and records are kept of decisions made thereat. Directors should meet at least four times in each calendar year (with a maximum gap of 120 days between two meetings). Further one meeting in each quarter shall be conducted. Board meeting can be held anywhere and  at any time( on sunday as well). The quorum for the Board Meeting shall be at least 2 directors or 1/3rd of the total number of directors, whichever is higher. Quorum means the minimum number of Directors whose presence is necessary for holding the Meeting. The Notice for the date and purpose of the meeting should be given to each Director at least 7 days in advance from the date of the meeting. The discussions of the meeting need to be drafted and recorded in the form of “Minutes of Board Meeting” and maintained at the Registered Office of the Company. It is also required to disclose the number of meetings held during each financial year in Directors Report.

3.  Shareholders Meetings-Shareholders’ meetings can be called by the Directors or in certain circumstances by the shareholders. Every Company is required to hold an Annual General Meeting (AGM) of its shareholders once in every year. However extra ordinary General Meeting can be called whenever is required. It can be held only on a working day with in normal business hours (9 am to 6 pm). AGM shall be conducted within a period of six months (with a maximum gap of 15 months between two such meetings) from the date of closing of the financial year. It shall be held at the registered office of the company or at some other place within the city in which the registered office of the company is situated. The AGM can also be held at any other city with the prior approval of the shareholders. Notice intimating the date, time and venue of the meeting shall be given at least 21 clear days in advance of the Meeting. Two members personally present will be the quorum of the meeting. The discussions of the meeting need to be drafted and recorded in the form of “Minutes of Annual General Meeting” and maintained at the Registered Office of the Company.

Company filings-Company is required to file every year the FINANCIAL STATEMENTS along with Directors Report, Auditors Report and other documents to the Registrar of Companies within 30 days of date of AGM. The Company is required to file every year its ANNUAL RETURN disclosing details of its shareholders, directors etc. to the Registrar of Companies within 60 days of date of AGM. Besides annual filing, Company is also required to intimate the Registrar of Companies as and when any event takes place in the Company such as increase in authorized capital, allotment of shares etc.

4.     Financial Statement and Statutory Audit- Directors are responsible for maintenance of financial statement which gives true and fair view of affairs of the Company. The financial Statements are approved by Board and signed by Directors on its behalf. Statutory Auditor is appointed in the AGM of the Company. However first Auditor is appointed by the Board of Directors in board meeting within 30 days of incorporation of the Company. The tenure of Auditor is 5 consecutive years.

5.     Statutory Registers and Records- Company has to maintain various statutory registers and records as required by the Companies Act such as Register of Shares, Register of Members, Register of Directors & Key Managerial Personnel, Register of Debenture holders, Register of Contracts with related parties etc. Besides, incorporation documents of the company, resolutions of the meetings, minutes of the meetings etc are also required to be preserved by the Company for such period as required by the Companies Act, 2013. Directors are required to ensure that proper registers and records are maintained and completed as per the requirement.

6.     Disclosure by Directors-Every Director of the Company is required to disclose his interest in other companies, bodies corporate, firms, association of Individuals every year. This shall be done by giving a declaration in writing to the company in a specified format (Form MBP 1).Every Director is also required to intimate his disqualification to the company every year in specified form (Form DIR 8).

7.        Displaying Company’s Identity- Directors must ensure that name, address of registered office and corporate identity number (CIN) along with telephone number, fax number, e-mail and website addresses, if any, are printed in all its business letters, bill heads, letters, papers and in all its notices and other official publications. The Company’s name and address should also be displayed outside of every office or place in which business of the company is carried on.

8.     Charges-The Directors must ensure that particulars of any charge created by the company or attaching to the property acquired by the company are intimated in prescribed form to Registrar of Companies within 30 days of such creation or acquisition of property. Register of Charges will also be maintained at the registered office of the Company.

9.     Other Statutory Duties- The Directors are also responsible for ensuring the compliances of other relevant legislations such as Income Tax Act, 1961, various labour laws and any other acts applicable to the Company.