Company Management: Directors—Appointment, Powers, Duties and Disqualifications (Basics) Questions

Question 1

State one way directors’ powers are exercised.

Accepted Answer

Directors’ powers are exercised through **board resolutions** passed at board meetings.

Question 2

Define director (one line).

Accepted Answer

A **director** is a person appointed to the Board to manage and direct the company’s affairs.

Question 3

What is Board of Directors?

Accepted Answer

The **Board of Directors** is the collective body of directors responsible for overall management and policy decisions of the company.

Question 4

State one fiduciary duty of a director.

Accepted Answer

A director must act in **good faith** in the best interest of the company.

Question 5

Give one example of director disqualification (concept).

Accepted Answer

A person of **unsound mind** (or an undischarged insolvent/convicted person) can be disqualified from being a director (concept).

Question 6

Directors should avoid conflict of interest. (True/False)

Accepted Answer

True. Directors must avoid **conflict of interest** and disclose any interest in contracts or arrangements.

Question 7

Explain any three powers of directors (brief) using points.

Accepted Answer

Any three powers (overview):

- approve important business policies and decisions
- borrow funds/raise loans (as per law/approvals)
- issue shares/securities (as per law)
- invest company funds and approve contracts

These powers must be exercised within Companies Act, **MOA** and **AOA**.

Question 8

Explain duties of directors (any three) using a small table.

Accepted Answer

Duties of directors:

| Duty | Meaning |
|---|---|
| **Good faith** | act in company’s best interest |
| Disclosure | disclose interest; avoid conflicts |
| **Due care** | exercise skill, care and diligence |
| No secret profit | do not gain undisclosed benefits |

Any three duties can be written with brief explanation.

Question 9

Differentiate executive and non-executive directors (brief) using a table.

Accepted Answer

Executive vs non-executive directors:

| Basis | Executive director | Non-executive director |
|---|---|---|
| Role | day-to-day management | oversight and guidance |
| Involvement | operational | policy/monitoring |
| Example | managing/whole-time director | independent director (concept) |

Thus, executives manage operations; non-executives provide oversight and independent judgement.

Question 10

Write board meeting decision-making as a simple flow and mention why minutes matter (brief).

Accepted Answer

Flow:
Notice/agenda → Meeting/quorum → Discussion → **Resolution** → Minutes → Implementation

Minutes matter because they are the **official record** and evidence of board decisions and compliance.

Question 11

Explain difference between directors’ powers and duties (brief) using a table.

Accepted Answer

Powers vs duties:

| Basis | **Powers** | **Duties** |
|---|---|---|
| Meaning | authority to take decisions | obligations to act properly |
| Focus | management actions | **good faith**, care, compliance |
| Nature | enable control | ensure accountability |

Thus, powers allow directors to act; duties ensure they act lawfully and ethically.

Question 12

Explain appointment of directors (exam-style) with a table and conclusion.

Accepted Answer

### Modes of appointment (overview)

| Mode | Who appoints | Example |
|---|---|---|
| At incorporation | subscribers/first directors | first board |
| General meeting | shareholders | regular directors |
| Board appointment | board (as per rules) | additional/alternate |
| Nominee | lender/investor (where allowed) | nominee director |

### Conclusion
Appointment should follow eligibility, consent and proper filings; directors then act as agents and fiduciaries of the company.

Question 13

Explain directors’ duties (fiduciary and statutory) (exam-style) with a table and conclusion.

Accepted Answer

### Directors’ duties
Directors must act honestly and lawfully.

| Duty category | Key duties |
|---|---|
| **Fiduciary** | **good faith**, avoid conflict, no secret profit, proper purpose |
| Statutory | compliance with law, due care/diligence, disclosures and filings |

### Conclusion
By following fiduciary and statutory duties, directors protect stakeholder interests and ensure good corporate governance.

Question 14

Explain disqualifications of directors (exam-style) with a table and conclusion.

Accepted Answer

### Disqualifications (overview)

| Ground | Example (concept) |
|---|---|
| **Unsound mind** | declared by competent authority |
| Insolvency | undischarged insolvent |
| Conviction | disqualified by court/authority |
| Defaults | serious compliance defaults leading to disqualification (concept) |

### Conclusion
Disqualification rules ensure that only fit and proper persons manage companies, improving governance and stakeholder protection.

Question 15

Discuss powers of directors and limits on those powers (Act + MOA/AOA) (exam-style) with a table and conclusion.

Accepted Answer

Powers and limits:

| Aspect | Point |
|---|---|
| Powers | manage affairs via decisions/resolutions |
| **Limits** | Companies Act + **MOA/AOA** |
| Method | exercised by **board resolutions** |

Thus, powers are wide but restricted by law and constitutional documents.

Company Management: Directors—Appointment, Powers, Duties and Disqualifications (Basics)

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