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Secretary is an employee of the company. He enjoys the power and advises the management.

Statutory duties of a company secretary are as follows:

• To organize meetings and be present at all the meetings of the company.
• To maintain the minutes of all meetings.
• To issue notices and circulars to the members of the company.
• To maintain and update the Register of members and debenture holders and other books of the company.
• To file all necessary returns with the Registrar of Companies.
• To communicate with the shareholders on various matters.

As it is stated in the definition itself the Managing Director is entrusted with the substantial powers of management, which clearly indicates that he has been given certain important powers of routine business matters of a company.

The powers exercised by him are fellows:

• To act as a link between the Board of Directors and the managerial staff.
• To look after the management and administration of a company.
• To appoint the company employees.
• To participate in policymaking as well as policy execution.
• To sign contracts on behalf of a company.
• To decide about the investment of funds of a company.
• To receive remuneration from a company.

Chief Financial Officer is responsible for the company’s financial plan.

d) All the above options

c) Sleeping partners

(i) Directors are regarded as an elected representatives of shareholders of the company.

(ii) A small shareholder is a person holding shares of a maximum of ₹ 20,000.

(iii) The managing director needs to be the director of the company.

Importance of DIN:

• It helps the investors to take accurate and appropriate decisions, as through DIN they get to know the composition of top management of the company. 
• It helps to handle the problems arising due to the company creating fraud after raising capital from the investors. 
• It helps to detect and handle offenses committed by a particular Director.

(i) The first secretary appointed by the promoters of the company is termed as Pro-tem Secretary. He may or may not be appointed as a regular secretary by the Board.

(ii) Fees paid to the director for attending Board or Committee meeting is called as Sitting fees. It may extend up to Rs. one lakh also.

The small scale business organizations are sole trading concern, partnership firm and Hindu undivided family firms.

Sole trading concerns provide employment to some people and they help in distribution of wealth.

Indian Partnership Act was passed in the year 1932.

Explanation: 

The Indian Partnership Act was passed in the year 1932, According according to which the Indian Partnership Act 1932, “partnership is the relation between two or more persons who have agreed to share the profits of a business carried on by all or any of them acting for all”.

The limitations of the sole trading concerns lead to the formation of partnership firms. In these firms two or more persons Join together and carry’ out the business. Partnership act was passed in 1932. According to the section 4 of partnership act the partnership firm is defined as the relation between the persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

1. No legal formalities are required to commence the business. 

2. It can be started by own capital. 

3. No difficulties arise in day to day running of the business. 

4. The owners enjoy all the profits and bears all the losses.

• It is an audit that checks the compliance of various legislation including the Companies Act, other Corporate Acts, and economic laws.
• It aims at detecting errors and mistakes in the compliance mechanisms.
• It gives confidence to regulators, management authorities, and shareholders that the company is following a disciplined approach of evaluation and improve effectiveness and risk management.
• Thus, Secretarial Audit is required under the laws.

Importance of Secretarial Audit:

• It provides a mechanism that monitors the compliance requirements. 
• It detects errors and mistakes in compliance with companies’ rules and regulations mechanism. 
• It prevents the company from the risk and losses due to non-compliance. 
• It builds the confidence of regulators, management, and stakeholders. 
• Investors feel relaxed that the company is following a disciplined approach towards management.

It is an audit that monitors the compliance requirements of the company. The main aim of such an audit is to detect errors and mistakes in compliance with the rules and regulations of the Companies Act. It builds confidence among regulators, management, and shareholders of the company.

An officer responsible for the company’s finances is called Chief Financial Officer. He need not be a director of the company. He has to compulsory sign the audited financial statements of the company.

• Directors play a triple role i.e. in the form of an agent, as a managing partner, and as a trustee.
• As an agent, the director deals skillfully, carefully, and elegantly while representing the company with outsiders.
• As a managing partner, the director acts as a representative of the shareholder and manages the company on their behalf.
• As a trustee, the director acts as a guardian of the interest of shareholders and a company.
• They use the company’s funds in the most appropriate manner and cautiously.
• They are also the trustee of all the assets of the company.
• Thus, directors play a triple role.

The company secretary is appointed to perform functions of the company and he is appointed by a resolution of the Board. He has to follow the terms and conditions decided by the board. He should be a member of ICSI.

(i) True

(ii) True

(iii) True

(iv) False

(v) False

Representatives elected by the Equity Shareholder in their Annual General Meeting are called as Board of Directors. They are allotted certain powers to control and manage the business of the firms.

Non-Executive Director is known as ‘Outside Director’. Non-Executive Director is not involved in the day-to-day management of the company. He is appointed to get second opinions from the board.

i. He was required to obtain DIN. It is compulsory to acquire DIN for every Director.

ii. The company act has not prescribed any academic or professional qualification for directors, so he can obtain directorship.

iii. The managerial position entitles him to get managerial remuneration so if Mr. A is appointed as director of PQR Co. Ltd then he is entitled to remuneration.

Correct option is (A) 4

Company Secretary provides guidance to the Board of Directors.

Independent Director is a director other than managing director, whole-time director, or a nominee director.

The main aim of Secretarial Standards is to standardize all diverse secretarial practices prevailing in the corporate world.

The office of a Director shall automatically become vacant in the following ways:

• Any disqualification: A person cannot be appointed as a director if he is of unsound mind or insolvent or convicted by the court.
• Absentee at Board meeting: Director who has been absent in the meeting of the board of directors held during the period of 12 months with or without taking leave of absence of the Board.
• Disqualification by Court or Tribunal: Director has to vacate office if he has been disqualified by an order of a court or the Tribunal.
• Provision of the Act: Director has to vacate office if he is removed under the provisions of the Companies Act.

• Director is a person appointed to manage, direct and supervise the affairs of the company.
• The power of the Board of Directors are as follows:
• To appoint or remove key managerial personnel: The Board of Directors has the power to appoint and remove key managerial personnel.
• To recommend dividend: The board of directors recommends the dividend to the shareholders.
• To fill a casual vacancy in the Board: Casual vacancy in the board arises due to different reasons such as the death of a director who is filled by the Board at the Board meeting.
• To issue securities whether in India or abroad: Board of Director’s issue securities means shares, debentures, bonds) in India and abroad also.

Easy transfer of shares:

• The shareholders sell and purchase the shares of the company in the stock market. They can easily do so subject to the provisions of the company and the law.
• If one sees trial ine company is performing well he can buy its shares from the stock market. On the other hand the holder of the shares can sell them at the stock market and book his profit.
• This way the share-trading continuous in the market. Thus, trading and transfer of ownership of shares is one of the main and continuous characteristic.

Liability of members:

The liability of members is limited to the face value of number of shares he possesses of that company. This means that if a share-holder possesses 50 shares of ₹ 100 each then his total share in that company is of ₹ 5000. If the company goes bankrupt the share-holder will lose only ₹ 5000 he invested in the company and he will not be liable for the entire loss of the company.

• Note that, the concept of unlimited liability is rarely seen in companies.
• The company in its Memorandum of Association on mentions whether the share-holder will have limited or unlimited liability.

• Since the company is an artificial person, it needs to be represented by the Director.
• They deal on behalf of the company.
• Directors should deal skillfully, carefully, and diligently.
• Directors are held liable as an, while company is held liable as the principal.
• A Director is an agent as he acts between the company and shareholders.
• Thus, a director is an agent of the company.

• Directors have to work as a team as Board of Directors, not as an individual.
• The powers by Board are subject to provisions of the Companies Act and Memorandum and Articles of Associations.
• Director is required to perform his functions.
• He represents shareholders to conduct and manage the business of the company on their behalf.
• They are entrusted with vast powers of management and perform several functions which are proprietary in nature like allotment of shares, raising of loans, investing funds of the company.
• This is because they themselves are significant shareholders of the company.
• In fact, they are the most active shareholders of the company.
• Thus, Directors are the managing partners of the company.

Qualification shares are those shares that are to be bought by the intending director, so as to become a director of a company.

• Company Secretary plays a three-fold role in the form of – as a statutory officer, as a coordinator, and as an administration officer.
• As a statutory officer, the secretary signs the document for authentication, files annual returns to ROC, maintains various statutory registers and ensures compliance with the law.
• As a coordinator, the secretary acts as a network between the Board of Directors and other executive officers at different levels. He acts as an internal as well as external coordinator for the company.
• As an administrative officer, the secretary ensures the implementation of various policies of the company and also supervises and controls the functioning of various departments of the company.
• Thus, Company Secretary plays a triple role.

Common seal:

• A company has a ‘seal’ or say stamp is used while dealing with third parties, entering into contracts, issuing share certificates, documents and day-to-day transactions of the company.
• This seal is called ‘common seal’ because it can be used by any authorized officer of the company.
• Stamping a document with this seal means that the company expresses its consent to whatever is mentioned in the document.

1. A company being an artificial person cannot sign on its own. 

2. So, the law requires, every company to have its seal, bearing its name on it. 

3. Common seal is a symbol of company’s incorporate existence. It is like a signature of the company. 

4. It has to be affixed on all the important documents of the company. 

5. It has to be witnessed by a Company Secretary and minimum 2 directors.

i. The Board of Directors

ii. Secretarial audit

iii. Company Secretary

iv. Fiduciary

v. Secretarial Standards on meetings of the BOD

vi. Secretarial Standards on General Meeting

vii. Secretarial Standards on Dividend

The executive director (WTD) is in full-time employment with the company.

• Directors are elected representatives of the company’s shareholders.
• The status of an employee is within the limits of his contract and service.
• His employer holds the ultimate control to guide his activities and functions.
• These limits of an employee cannot be applied to a director.
• So a director cannot be called an employee of the company.
• Thus, a director cannot be called an employee of the company.

As per section 149 of the Companies Act, 2013, any director other than a managing director, whole-time director, or a nominee director is termed as an independent director.

Managing Director is a director appointed by virtue of an agreement with the company; or by passing a resolution in the general meeting or by its Board of Directors or by virtue of Memorandum of Associations or Articles of Association. He is entrusted with substantial powers of management of the affairs of the company. He is appointed for a period of 5 years.

(i) Director Identification Number

(ii) Secretarial Audit

(iii) Secretarial Standard

(iv) Secretary

(v) Whole Time Director

The seal or stamp of a company that it uses while sighing contracts, agreements, certificates and other important documents is called the common seal. A document carrying the seal shows the consent of that company.

A member can neither enter into a contract on behalf of the company nor the company is liable for the act of members. However, members can enter into contracts with the company.

Executive Director is also called as ‘Whole Time Director’, He is in full-time employment with the company. He plays an important role in the day-to-day management of the company.