Duties of a Director in a Private Limited Company

Last Updated at: Oct 30, 2020
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In a recent decision, the Supreme Court of India has reaffirmed the liability of a director in a company. The court said the liability depends on the role such director played in managing the affairs of the company and not merely by virtue of being a director in the company.


All the directors of various companies registered under the ROC of India must fulfil some mandatory obligations. The fact is that the directors of many start ups fail to educate themselves about these duties. As a result, they end up making some costly mistakes in the end.

Many will forget to educate themselves on these, but any director of a company, whether one-person, private or public should be aware of his/her duties before becoming one. None of what follows will be ground-breaking. After all, you should know that, as a director, you need to act in the best interests of the company. Nonetheless, here are the duties listed of directors.

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Best Interests: At all times, the director must act in the best interests of the company, particularly above personal interest. Even a director acting honestly but not in the best interests of the company is in breach of duty.

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Proper Use of Assets: A director is in charge of the assets of the company and is the signatory in case of the transfer of any assets of the company. The director must not take advantage of this power.

Keep Information Confidential: As a director, you have access to all important information about the operations and financials of a company. This should remain confidential and not shared with anyone unless it is for the benefit of the company.

Attend Meetings: A director must attend as many board meetings as possible. Any director absent for more than three meetings in a calendar year will be automatically terminated from the board.

Not to Exceed Powers: The Memorandum of Association (MOA) of a company defines what a company can do, while the Articles of Association (AOA) state the powers given to its directors. The directors must ensure that it stays within the boundaries of both.

It is vital that as the director of any company you keep all the information about it confidential. If your company is listed on any of the stock exchanges in India, then confidentiality assumes greater significance. You might be charged for insider trading for unethical actions and omissions barred by law.