Students get through the TN Board 12th Commerce Important Questions Chapter 27 Company Management which is useful for their exam preparation.

TN State Board 12th Commerce Important Questions Chapter 27 Company Management

Very short answer questions

Question 1.
What do you mean by Director?
Answer:
The person who takes an active interest in the well-being of a company and one of the members of the board of directors is called a Director of a company. A director is a person from a board of Directors who leads (or) supervises the functions of a company.

Question 2.
Mention a few duties of a director.
Answer:
The following are the duties of Directors:

  1. Collective duties of Directors
  2. General duties of Directors
  3. Specific duties of Directors

TN Board 12th Commerce Important Questions Chapter 27 Company Management

Question 3.
Who can a non-executive Director?
Answer:
A non-executive director typically does not engage in the day-to-day management of the organization but is involved in policymaking and planning exercises. In addition, non-executive Directors’ responsibilities include the monitoring of the executive Directors and acting in the interest of the company shareholders.

Question 4.
Who is called an independent Director?
Answer:
According to section 149(6), an independent director is an alternate Director other than a Managing Director who is known as a whole-time Director or nominee Director. The company has to appoint a minimum of two independent Directors.

Question 5.
How to nominate the Director?
Answer:
A Director nominated by any financial institution in pursuance of the provisions of any law for the time being in force, or of any agreement, or appointed by any Government or any other person to represent its interest.

Question 6.
What is the maximum limit a company can appoint Directors?
Answer:
A company can appoint maximum (15) fifteen Directors. A company may appoint more than fifteen directors after passing a special resolution in a general meeting and approval of the Central Government is not required.

Question 7.
State the general provisions relating to the appointment of Directors?
Answer:

  1. Every Director should be appointed by the company in a general meeting as per the provision of the act.
  2. Director identification number is compulsory for the appointment of Director of a company.
  3. A Director shall furnish his identification number and a declaration that he is not disqualified to become a Director under the act.

TN Board 12th Commerce Important Questions Chapter 27 Company Management

Question 8.
Who can remove a Director of the company?
Answer:
A director of a company can be removed from his office before the expiry of his term by the shareholders, the Central Government, the company law board.

Short answer questions

Question 1.
Explain about the “First Director”?
Answer:
“First Director” – Director means those Directors who hold office from the date of incorporation of the company. The first Directors are usually named in the articles of association or are appointed by the directors.
In the case of one person company, an individual being a number shall be deemed to be its first Director until the Director(s) are duly appointed by the member in accordance with the provision of section 152.

Question 2.
Explain managerial remuneration and its perquisites?
Answer:
The managerial remuneration is payable to persons appointed as 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.

  1. Value of rent-free or concession accommodation.
  2. Value any other items provided free of cost or at a concessional rate.
  3. Value of securities/sweat equity shares allotted or transferred by the employer or former employer to the employee.
  4. A contribution made by an employer to an approved superannuation fund.
  5. Value of any other fringe benefit or amenity.
  6. Stock options would be part of the remuneration for all Directors.

TN Board 12th Commerce Important Questions Chapter 27 Company Management

Question 3.
Discuss the rights of the Director?
Answer:
Rights can be categorized into individual rights and collective rights. Individual rights such as:

  1. Right to inspect books of accounts.
  2. Right to receive notices of board meetings.
  3. Right to participate in proceedings and cast vote in favor or against resolutions.
  4. Right to receive circular resolutions proposed to be passed.
  5. Right to inspect minutes of board meetings.

Collective rights are as follows:

  1. 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.
  2. Right to elect a chairman: The Directors are entitled to elect a chairman for the board meetings.
  3. Right to appoint a managing Director: The board has the right to appoint the Managing Director/manager of the company.
  4. Right to recommend dividend: The board is entitled to decide whether the dividend is to be paid or not shareholders cannot compel the Directors to pay a dividend. However, they can reduce the rate of recommended dividends. Payment of dividends is the prerogative of the board.

Long answer questions

Question 1.
State the liability to the company of Directors.
Answer:
The Directors shall be liable to the company for in the following cases: Where they have acted ultra – vires the company: For example, where they apply the funds of the company to objects not specified in the memorandum of association or when they pay dividends out of capital.
Where there is a breach of trust: Directors being the trustees of the company, should discharge their duties in the best interest of the company, where they commit a breach of trust resulting in a loss to the company they are bound to make good the loss.
Misfeasance: Directors are liable to the company for misfeasance. It covers willful negligence. However mere failure on the part of the Director to take necessary steps for recovery of debts due to the company does not constitute misfeasance.

TN Board 12th Commerce Important Questions Chapter 27 Company Management

Question 2.
Differentiate between manager and Director?
Answer:
TN Board 12th Commerce Important Questions Chapter 27 Company Management 1
TN Board 12th Commerce Important Questions Chapter 27 Company Management 2

Question 3.
Differentiate between the managing director and the whole-time director?
Answer:
TN Board 12th Commerce Important Questions Chapter 27 Company Management 3

TN Board 12th Commerce Important Questions Chapter 27 Company Management

Multiple-choice questions

1. The group of human beings who undertake the responsibility to run the business are known as:
(a) Human resource
(b) Board of directors
(c) Human resource management
(d) None
Answer:
(b) Board of directors

2. The directors of a company formulate:
(a) Policies
(b) Objectives
(c) Both (a) and (b)
(d) Work
Answer:
(c) Both (a) and (b)

3. The directors are expected to act in:
(a) Good faith
(b) Utmost care
(c) Perform work
(d) All the above
Answer:
(d) All the above

4. Mention the key managerial personnel:
(a) The chief executive officer
(b) The managing director
(c) The company secretary
(d) All the above
Answer:
(d) All the above

5. The general board is empowered to:
(a) Set the policies
(b) Decision
(c) Work
(d) Duties
Answer:
(a) Set the policies

TN Board 12th Commerce Important Questions Chapter 27 Company Management

6. An ……….. can be either a whole-time director of the company or a managing director:
(a) Executive director
(b) Non-executive director
(c) Independent director
(d) All the above
Answer:
(a) Executive director

7. A substitute to a director who may be absent from India for a period, a company can appoint:
(a) Shadow director
(b) Independent director
(c) Alternative director
(d) Additional director
Answer:
(c) Alternative director

8. A person who is not a member of the board but he has some power to run a company is known as:
(a) Additional director
(b) Shadow director
(c) Independent
(d) Nominee director
Answer:
(b) Shadow director

9. A private company shall have a minimum of ……… directors.
(a) Ten
(b) Eight
(c) Nine
(d) One
Answer:
(d) One

10. A company can appoint a maximum number directors.
(a) 10
(b) 12
(c) 15
(d) 9
Answer:
(c) 15

TN Board 12th Commerce Important Questions Chapter 27 Company Management

11. The power is stated in the term of employment.
(a) Whole-time director
(b) Managing director
(c) Both (a) and (b)
(d) None
Answer:
(a) Whole-time director

12. ……… Comes under top-level management and play an important role in decision making.
(a) Directors
(b) Managers
(c) Executives
(d) Employees
Answer:
(a) Directors

13. Who is entrusted with substantial power?
(a) Whole-time director
(b) Manager
(c) Managing director
(d) None
Answer:
(c) Managing director

14. Who is in charge of the particular department of the company?
(a) Director
(b) Manager
(c) Secretary
(d) All the above
Answer:
(b) Manager

TN Board 12th Commerce Important Questions Chapter 27 Company Management

15. A director can be removed from his office in the following way.
(a) The shareholders
(b) The Central Government
(c) The company law board
(d) All the above.
Answer:
(d) All the above.