Company Management Text Book Solutions

Dear Class 12 Samacheer Kalvi students, here are the text book solutions for Chapter 27, Company Management in Commerce for your reference.

I. Choose the Correct Answers:

II. Very Short Answer Questions:

1. Name the companies required to appoint KMP.

Following Companies are required to appoint KMP.

(i) Every listed company.
(ii) Every public company having paid up share capital of Rs.10 crore or more.

2. Who is whole time Director?

A Director is one who devotes whole of his time of working hours to the company and has a significant personal interest in the company as the source of his income.

3. Who is called as Managing Director?

A Director is one who is employed by the company and has substantial powers of management over the affairs of the company subject to superintendence, direction and control of the board.

4. Who can be Executive Director?

An executive director is a Chief Executive Officer (CEO) or Managing Director of an organization, company, or corporation, who is responsible for making decisions to complete the mission and for the success of the organisation. In the globalised business world the title of President or of Chief Executive Officer is used instead of Managing Director.

III. Short Answer Questions:

1. When are alternative directors appointed ?

Alternate director is appointed by the Board of Directors, as a substitute to a director who may be absent from India, for a period which is not less than three months. The appointment must be authorised either by the Articles of Association of the company or by a passing a resolution in the General Meeting. The alternative director is not a representative or agent of Original Director.

2. Who is a shadow director?

A person who is not the member of Board but has some power to run it can be appointed as the director but according to his/her wish.

3. State the minimum number of Directors for a Private company.

In case of One Person Company: The requirement of directors is one.

Other Private Companies: The minimum requirement of Directors is two.

IV. Long Answer Questions:

1. Who are the KMP?

The definition of the term Key Managerial Personnel is contained in Section 2(51) of the Companies Act, 2013. This Section states:

(i) the Chief Executive Officer
(ii) the Managing Director or the Manager;
(iii) the Company Secretary;
(iv) the Whole-time Director;
(v) the Chief Financial Officer; and
(vi) such other officer as may be prescribed;

2. Brief different types of Directors. (5)

1. Residential Director: – According to Section 149(3) of Companies Act 2013, Every company should appoint a director who has stayed in India for a total Period of not less than 182 days in the previous calendar year.

2. Independent Director: According to Section 149(6) an independent director is an alternate director other than a Managing Director who is known as Whole Time Director Or Nominee Director. The following type of companies has to appoint minimum two independent directors:-

a) Public Companies which have Paid-up Share Capital- ₹10 Crores or More;
b) Public Companies which have Turnover- ₹100 Crores or More:
c) Public Companies which have total outstanding loans, debenture, and deposits of ₹50 Crores or More.

3. Small Shareholders Directors: Small shareholders can appoint a single director in a listed company. But this action needs a proper procedure like handing over a notice to at least 1,000 shareholders or 1/10th of the total shareholders.

4. Alternate Directors: Alternate director is appointed by the Board of Directors, as a substitute to a director who may be absent from India, for a period which is not less than three months. The appointment must be authorised either by the Articles of Association of the company or by a passing a resolution in the General Meeting. The alternative director is not a representative or agent of Original Director.

5. Women Director: As per Section 149 (1) (a), there are certain categories according to which there should be at least one woman as a director on the Board. The following class of companies shall appoint at least one woman director

(i) every listed company;
(ii) every other public company having: (a) paid–up share capital of one hundred crore rupees or more; or

(b) turnover of three hundred crore rupees or more.

3. State the qualification of Directors.

A director shall possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company’s business. According to the different provisions relating to the directors; the following qualifications may be mentioned:

1. A director must be a person of sound mind.
2. A director must hold share qualification, if the article of association provides such.
3. A director must be an individual.
4. A director should be a solvent person.
5. A director should not be convicted by the Court for any offence, etc.