Saturday, April 12, 2014

Companies Act, 2013: Directors’ Duties and Liabilities

The NSE Centre for Excellence in Corporate Governance (CECG) has issued its most recent quarterly briefing titled “Directors’ Duties and Liabilities in the New Era”. The executive summary is as follows:

- Since directors and the board play a pivotal role in corporate governance, the law foists duties and liabilities on them;

- The Companies Act, 2013 has brought about a paradigm shift by considerably enhancing directors’ duties and liabilities;

- The directors’ duties are now codified and extend to considering the interests of stakeholders other than shareholders;

- Directors are, however, entitled to various protective measures in the form of mitigating factors either conferred upon them by law or through practical mechanisms they may establish.

This would not have been possible without the excellent inputs and suggestions received from members of the CECG at various points in time during the drafting process.

1 comment:

The Corporate Prof. said...

No doubt the Indian Companies Act 2013 has extended the frontiers of Company Law. In codifying Directors' Duties, it treads the path charted by the UK Companies Act 2006. However, much more interesting is its provisions on independent directors. Such matters have not generally been the subject of statutory provisions. They have usually been provided for in corporate governance codes. By providing for independent directors in the Companies Act 2013, their role in corporate governance is recognized and enhanced.