Journey of a Director : From “Game of thrones” to “Game of thornes”
Gone are the days the people were fascinated to be on the board of a Corporate for the sake of boasting the position of the captain of it. Directors not only the watch dogs and whistleblowers but are confidence keepers of the stakeholders of the company too. Unlike the erstwhile Companies Act, 1956, the new companies Act had made it the statutory duty of director to act in accordance with the articles of association of the Company. The said mandate made it obligatory on the part of the directors of a company to be well versed with the clauses of the Articles of association and act in accordance with the same.
A director have to act in good faith in order to promote the objects of the company for the benefit of its members as a whole and in the best interest of the company, its employees , the shareholders, the community and for the protection of the environment. The said statutory duty casted upon the directors is very huge and immense. It requires lot of commitment and dedication at the end of a director. In normal parlance, main objective of a company to make profit. But the Act had gone one step ahead and states that the director should promote the objects of the company for the benefit of its members. A member of a company is entitled for “Dividend” on his investments, though the said is not a right of a shareholder. So the Act impliedly mentions that the director have to work hard to give some benefits to the members of the company. Similarly the Act states that the Directors shall have to act in the best interests of the company, its employees, the shareholders. Though the Act cast upon such a heavy burden on the shoulders of the directors, the “benefits” which is intended by the act cannot be measured in absolute terms. As the Act does not defines the term “best interests” it is better for a director to be “reasonable” in his deeds. The term “reasonable” is a meaningful word. It means fair, sensible, appropriate or moderate. So, in short, the Act expects a Director to be reasonable in his duties. Any action which is “not reasonable” shall be termed as “unreasonable” and while performing the duties of a director he /she should think about famed “sword of Damocles” , which is literally hanging over his/her head.