An Examination of the Obligations of Directors under the 2013 Companies Act in Contrast to the 1956 Companies Act

  • Abhyudaya Tiwari and Abhinav Kumar Rai
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  • Abhyudaya Tiwari

    Student at Amity University, Lucknow, India

  • Abhinav Kumar Rai

    Student at Amity University, Lucknow, India

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The success of a company largely depends on the individuals who manage and direct it, making it essential to appoint directors who possess integrity and proper management knowledge. To ensure better corporate governance and security, the Companies Act of 2013 in India has made significant contributions by defining the obligations and duties of directors, especially those in public limited companies. The previous Companies Act of 1956 was inadequate in this regard, but the Companies Act of 2013 can be viewed as landmark legislation that clarifies, redefines, and expands the ambit of directors' obligations and duties. The new provisions in the Companies Act of 2013 offer greater protection to directors concerning their conduct and duties, ensuring better corporate governance and management. These provisions empower and enable regulators, courts, and stakeholders to judge, regulate, and control directors' activities and obligations more fairly and effectively. The article offers valuable and insightful information on these new provisions of the Companies Act of 2013, specifically related to the roles, obligations, and duties of directors and independent directors of public limited companies. The welfare of an organization depends on the shoulders of its directors, who are responsible for the interests of the company and its shareholders. Directors are essentially trustee agents and owe duties to the company; they are appointed by the shareholders to run the company's affairs for the benefit of the shareholders. Without good and proper directors, no company can achieve success, making the role of directors highly critical in any corporate governance system. The duties of directors are based on specific common law rules and equitable principles, and they owe these duties to the company and its stakeholders. The obligations of directors are of no significance if they cannot be fully enforced. Enforcement is provided through different types of controls, including state enforcement, statutory enforcement, and derivative actions. Common law provides three methods of enforcement, and breaches of directors' duties offer various remedies. If a director breaches an obligation, there are available remedies for the company, shareholders, and other stakeholders under the Companies Act 2006. Other laws that deal with breaches committed by directors and the remedies available against them include the Company Directors Disqualification Act 1986 (CDDA) and the Insolvency Act 1986.


Research Paper


International Journal of Law Management and Humanities, Volume 6, Issue 2, Page 1402 - 1407


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