Discuss the position, powers and liabilities of directors.

Legal position of Directors:

 
There are different views about the legal position of Directors. They have been described sometimes as trustees of the company and sometimes as its agents. Neither view is wholly correct but both contain elements of truth.

Fiduciary Position:

 
It is generally agreed that the Directors occupy a fiduciary position in relation to the Company. They
must make full disclosure of all material facts of the Company.
 

Officers:

 
The Section 2(i) (o) of the Companies Act provides that a Director is an officer of the Company.

Power of Directors:

 
Directors derive their power and authority from two sources (i) the Articles of Association of the Company and (ii) the Companies Act.
 

The articles of association generally contain a list of the powers, which may be exercised by Directors and the limitation on those powers. All acts and things done by the Board of Directors, within the powers given to it by the articles, are valid and binding on the company. It may be noted that a Director individually has no authority over the affairs of the Company except as regards matters, which have been specifically delegated to him by the Board.

Liabilities of Directors:

 
The liabilities of Directors may be analyzed with reference to liability of Directors to third parties, liability to the company, liability for breach of statutory duties and liability for acts of his Co-Directors. Directors' liability may be civil liability, criminal liability and unlimited liability.

Civil Liability:

 
The directors may, under certain circumstances, be liable to pay compensation to the Company and to
outsiders, such as:
1. Untrue statements in the prospectus.
2. Ultra vires acts.

Criminal liability:

 
For certain breaches of duty the Companies Act imposes criminal liabilities upon Directors such as: Untrue statements in prospectus, failing to keep certain register, falsification of books and reports etc.