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Corporate Governance, Issues And Perspectives: The Duty Of Directors Towards The Stakeholders




Abhyuday Mishra, OP Jindal Global Law School

‘Business needs to go beyond the interests of their companies to the communities they serve’


- Ratan Tata, Former chairman of the Tata Group

ABSTRACT:

In a company, the duties of a Director is sin quo non towards the company’s functioning. Given the wide range of activities that can unfold in a respective company, encompassing this scope of duties undertaken by the director is very prominent towards understanding how a company functions. The duties of the Directors were only briefly mentioned in Section 291 in the Companies Act of 1956 but not defined directly which created ambiguity onto who the directors are responsible towards, by law. Through the recommendations of the J.J. Irani Committee in 2005, directors duties in a company were established in Section 166 (2) of Companies Law Act, 2013. This stated ‘A Director of a company shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of the environment’1. Which defined and broadened the law’s understanding of the role of the Director in the company. These duties are not solely mentioned in Section 166 of the Companies Act but are mentioned in many other parts as well. Through this paper we understand the shortcomings of Section 166(2) of the Companies Act, 2013 and how it correspond to the irregularities with the pluralistic implementation in the CSR responsibilities of companies. The research methodology followed in this paper comprise of ; case laws, legislations and government reports and Secondary resources such as scholarly articles, journal papers and website articles are also used in the research.

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Indian Journal of Law and Legal Research

Abbreviation: IJLLR

ISSN: 2582-8878

Website: www.ijllr.com

Accessibility: Open Access

License: Creative Commons 4.0

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​All research articles published in The Indian Journal of Law and Legal Research are fully open access. i.e. immediately freely available to read, download and share. Articles are published under the terms of a Creative Commons license which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

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The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the IJLLR or its members. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the IJLLR.

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