Director and Board of Directors: Directors are the persons who manage the affairs of the company. They are collectively known as the Board of Directors or
Board. If we assume the company to be a body, the directors are its brain. The directors are the elected representatives of the shareholders.
Managing director: According to Sec. 2(26) of Companies Act, 1956, "a managing director means a director who, by virtue of an agreement with the company or of a resolution passed by the company in a general meeting or by its board of directors or, by virtue of its Memorandum or Articles of Association, is entrusted with substantial powers of management, which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called."
Shareholder and member: The word 'shareholder' is used in relation to a company having a share capital and there can be no membership except through the medium of shareholding. A holder of shares becomes a member only when his name is entered on the register of members. But the term 'member' is wider in scope and may be used in relation to all types of company. A person may become a member of a company without holding any share. Companies limited by guarantee or unlimited companies which may not have share capital, and therefore can have no shareholders but they do have members.
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6.13 SELF ASSESSMENT QUESTIONS
1. "Members includes shareholder while shareholder does not include member". Comment.
2. Who may become a member of a company? How to become member of a company ? What are the ways of cessation of membership? Discuss in detail.
3. How and what way are the directors of a company are appointed ?
4. Who are the persons who may not be appointed as directors? Can central government remove their disqualifications?
6.14 REFERENCES/SUGGESTED READINGS