A Director is an agent of the Company for the conduct of the business of the company. Directors of a company have fiduciary relationship with the company as well as the shareholders when he acts as an agent or officers of a company.
The director as the Companies Act, 1956 indicates, holds an extremely important position in the administration and management of a Company. It must be noted that the director actually works in different capacities at different times to ensure that the company is run in a legal and an efficient manner. The Act places immense responsibility on the soldiers of the directors.
Directors are bound to use their fair and reasonable diligence while discharging their duties and they shall act honestly, and with such care as may be reasonably expected from, having regard to their knowledge and experience.
The Companies Act has also seeks to introduce an element of objectivity in the office of a director, for this purpose the act also introduced the office of independent directors. However,the office of independent director has not been as successful in bringing efficient and honest corporate governance as it was expected. The Satyam scam is the biggest example!
Therefore, it can only be concluded that the Companies Act should be suitably be amended to introduce such in built checks and balances that the office of a director does not become an absolute, which practically is the case.
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