Liability to outsiders:
The directors are not personally liable to outsiders if they act within the scope of powers vested in them. The general rule in this regard in that wherever an agent is liable, those directors would be liable, but where the liability would attach to the principal only, the liability is the liability of the company. The directors are personally liable to third parties of contracts in the following cases:
a. They contract with outsiders in their personal capacity.
b. They contract as agents of an undisclosed principal.
c. They enter into a contract on behalf of a prospective company.
d. When the contract is ultra-vires the company.
In default of statutory duties, the directors shall be personally liable to third parties in the following cases:
1. Mis-statement in prospectus.
2: Irregular allotment.
3. Failure to repay application money if the minimum subscription is not received.
4. Failure to repay application money if allotment of shares and debentures is not dealt in on the stock exchange as specified in the prospectus.

The Managerial remuneration is payable to a person's appointed u/s 196 of the Act. The Term remuneration means any money or its equivalent given or passed to any person for services rendered by him and includes perquisites.
(i) value of rent-free or concession accommodation.
(ii) Value any other items provided at free of cost or at concessional rate.
(iii) Value of securities/sweat equity shares allotted or transferred by the employer or former employer to the employee.
(iv) A contribution made by an employer to an approved superannuation fund.
(v) Value of any other fringe benefit or amenity.
Forms of Managerial Remuneration
1) Based on Profit of the company.
2) Based on Shareholders' recommendations.
3) Based on Shareholders' and Central Government recommendations.

Rights can be categorized into individual rights and collective rights.
Individual rights are such as
(i) Right to inspect books of accounts
(ii) Right to receive notices of board meetings
(iii) Right to participate in proceedings and cast vote in favour or against resolutions
(iv) Right to receive circular resolutions proposed to be passed
(v) Right to inspect minutes of board meetings
Collective rights are as follows
(i) Right to refuse to transfer shares: Directors of private companies and deemed public companies are entitled to refuse registration of transfer of shares to a person whom they do not approve.
(ii) Right to elect a Chairman: The directors are entitled to elect a chairman for the board meetings.
(iii) Right to appoint a Managing director: The Board has the right to appoint the managing director/ manager of the company.
(iv) Right to recommend dividend: The Board is entitled to decide whether a dividend is to be paid or not. Shareholders cannot compel the directors to pay a dividend. However, they can reduce the rate of recommended dividend. Payment of dividend is the prerogative of the board.

General provisions relating to the appointment of directors
(i) Every director should be appointed by the company in general meeting as per the provision of the Act.
(ii) Director Identification Number is compulsory for the appointment of a director of a company.
(iii) Every person proposed to be appointed as a director shall furnish his Director Identification Number and a declaration that he is not disqualified to become a director under the Act.
(iv) A person appointed as a director should give his consent to hold the office of director in physical form on or before his appointment i.e., Consent to act as a director of a company.
(v) A company should file Form with the Registrar of Companies mentioning particulars of appointment of directors and Key Managerial Persons along with A the Consent form signed by Directors, as an attachment within 30 days of the appointment of a director with necessary fee.
(vi) Articles of the Company may provide the provisions relating to the retirement of all directors.

Directors are the persons duly appointed by the Company to lead and manage its affairs and their legal position.
(i) Directors as Agents: A company as an artificial person, acts through directors who are elected representatives of the shareholders and who execute decision made for the benefit of shareholders. Hence directors share a relationship of an agent and a principal with the company.
(ii) Directors as Managing partners: The management of a company is vested in the hands of many executives. So, the directors are virtuals managing partners and the Directors elected by shareholders are like partners to the shareholders.
(iii) Directors as trustees: Directors are trustees of the company's money and property and they have to safeguard them and use them for the sake of the company and on behalf of the company.
(iv) Directors as employees: Directors are professionals who manage the company for the benefit of themselves and for the benefit of the shareholders. However, if a director accepts employment in the same company under a separate contract of service, then, in addition to the directorship, he is also treated as an employee or servant of the company.
(v) Directors as officers: "Officer" includes any director, manager or key managerial personnel or any person in accordance with the directions or instructions the Board of Directors or any one or more of the directors who are or are accustomed to act. Therefore Director is treated as officers of a company.

 The power of the Directors grouped into four different heads viz.
(i) Statutory Powers of Directors
(ii) Managerial Powers of Directors
(iii) Powers only with a resolution
(iv) Other Powers
I. Statutory Powers of Directors:
(a) Power to make calls on shareholders in respect of money unpaid on their shares.
(b) Power to issue debentures.
(c) Power to borrow moneys otherwise than on debentures.
(d) Power to make loans·
II. Managerial Powers of Directors:
(a) Power to contract with the third party.
(b) Power to allot, forfeit or transfer shares of the company.
(c) Power to decide the terms and conditions to issue debentures.
(d) Power of Control and supervision of work of subordinates.
III. Powers only with a resolution:
(a) To sell or lease any asset of the company.
(b) To allow time to the director for repayment of the loan.
(c) To borrow money in excess of paid-up Capital and free reserves.
(d) To appoint a sole agent for more than 5 years.
IV. Other Powers:
(a) Power to fill a casual vacancy
(b) Power to appoint the first auditor of the company.
(c) Power to remove Key managerial personnel.
(d) Power to recommend the Interim and final dividend to shareholders

l. Collective duties of directors:
Directors as a part of Board perform certain duties collectively.
(i) Approval of annual accounts and authentication of annual accounts
(ii) Appointment of First Auditors
(iii) Issuance of Notice and Holding of Board meetings and shareholders meetings
(iv) Passing of resolutions at board meetings or by circulation.
2. General duties of Directors:
(i) Structuring or new policy to reach the objectives of a company.
(ii) Acting in accordance with the Articles of the company
(iii) Act in Good faith in order to promote the objects of the company
(iv) Perform duties with due and reasonable care and diligence.
3. Specific Duties of Directors
(i) Duty to disclose his name, address and occupation
(ii) Duty to disclose his shareholding and interest in Contracts of the company.
(iii) Duty to hold minimum qualification shares within two months after his appointment.
(iv) Duty to issue prospectus and fix the minimum subscription.
(v) Duty to take care that prospectus should not contain any false or misleading statement.
(vi) Duty to carry out all other activities as specified in the Act in time.

Remuneration Payable by company in case where is no profit or inadequacy of profit without Central Government and to pay remuneration in excess of the above limit is detailed below:

A director of a company can be removed from his office before the expiry of his term by
(i) the Shareholders
(ii) the Central Government
(iii) the Company Law Board
(i) Removal by shareholders 169
A company (whether public or private) may, by giving a special notice and passing an ordinary resolution, remove a director before the expiry of his period of office without the proof of mismanagement, breach of trust, misfeasance or other misconduct on the part of the director.
(ii) Removal by the Central Government:
The Central Government has been empowered to remove managerial personnel from office on the recommendation of the Company Law Board
(i) Where a person concerned in the conduct and management of the affairs of a company has been guilty of fraud, misfeasance.
(ii) Where the business of a company has not been conducted and managed by such a person, in accordance with sound business principles or prudent commercial practices;
(iii) Where the business of a company has been conducted and managed by such a person in a manner which is likely to cause injury or damage to the interest of the trade, industry or business.
(iv) Where the business of the company has been conducted and managed by such a person with the intent to defraud its creditors, members or any other persons.
(iii) Removal by the Company Law Board:
If an application has been made to the Company Law Board against the oppression and mismanagement of the company's affairs by a director, then the Company Law Board may order for the termination of the director's tenure.

A person shall not be capable of being appointed director of a company, if the director is
(a) Of unsound mind.
(b) An undercharged insolvent.
(c) Has been convicted by a court for any offence involving moral turpitude and sentenced in respect there of to imprisonment for not less than six months.
(d) Has not paid any call in respect of shares of the company held by him, whether alone or jointly with others.
(e) An order disqualifying him for appointment as director has been passed by a court in pursuance of section 203.
(f) He has been convicted of the offence dealing with related party transactions under section 188.
(g) He has not got the Director Identification Number.

(i) General Optimum Combination: Board of Directors shall have an optimum combination of executive and non executive directors with at least one woman director and not less than fifty percent of the board of directors shall comprise of non-executive directors.
(ii) When the non-executive Director is the Chairperson: In this case, at least one-third of the board of directors shall comprise of independent directors and where the company does not have a regular non-executive chair person.
(iii) when the non-executive chairperson is a promoter: When the non-executive chairperson is a promoter or is related to any promoter or person occupying management positions at the level of board of director or at one level below the Board of Directors.