CONCLUSION
The companies act does not give any managerial or executive powers to the chairman. The office of the chairman is recognized only for the purposes of the General Meetings. If the chairman is invested with executive powers then is to be treated as whole time director and the provisions of the companies act are to be complied with. The chairman who presides over the meetings is not a ministerial officer. He is neither a ministerial nor a judicial officer. The bonafide acts of the chairman of excluding a shareholder from voting or from becoming a director cannot be sued. The role of the chairman has essentially been of chairing the board meetings and the general meetings with the right to exercise the casting vote in case of a tie. Therefore in normal circumstances the chairman has no executive powers in the affairs of the co. so an office order issued by the chairman will not only be beyond his powers but also against the provisions of the articles as well as the Act and hence will be liable to be cancelled.
The chairman of the board is the central figure in holding the meeting and is the controlling and regulating factor in the conduct of the proceedings of the meeting. The Chairman of the Board is held responsible for the management, development and effective performance of the Board of Directors. It also provides leadership to the Board for all the aspects of the Board™s work. The chairman is always elected by the board and therefore he enjoys the support of the majority of the directors which eases the task of controlling the meeting and recording authenticated minutes. But the office of the chairman and the CEO shall essentially be separate as has been uniformly indicated by the various committee reports so that dignity of the office can be maintained. Even if the two offices are separate, still there is a requirement of vigorously independent non executive directors. Such independent non executive directors could be appointed as deputy chairman because there may be situations when there is a need to convey concerns to the board other than through the CEO or the chairman.
[1] Secretarial Standards on Meetings of the Board of Directors issued by the Council of ICSI (SS-1) [w.e.f. 13-12-2001]
[2] Clause 49 I (A)(ii) of the Listing Agreement w.e.f. 31-12-2005
[3] Chairman of the Board of Directors: Role in conducting company meetings, by S. Venugopalan, Corporate Law Adviser, 15th Aug, 2004 Vol 61 issue 4 pp 109-115
[4] The conduct of meetings by T.P.E. Curry and J. Richard Sykes, 20th Edition
[5] Nazir Hoossein v. Darayus Bhattena, (2000) 37 CLA 414
[6] Sec. 117 of the companies act
[7] (1998) 93 Com Cases 725, at pp. 36, 37
[8] Secretarial Standards on Meetings of the Board of Directors issued by the Council of ICSI (SS-1) [w.e.f. 13-12-2001], Para 5.1
[9] (2000) 5 SCC 601
[10] Introduction to the Company Law, Dr. Avtar Singh, 10th Edition, 2010, p 77
[11] The Hampel Committee was set up in Nov, 1995 to review the implementation of the recommendations given by the Cadbury and Greenbury Committee reports. It submitted its report in Jan, 1998 and the committee was chaired by Sir Ronnie Hampel, the then chairman if ICI (Imperial Chemical Industries)
[12] Para 3.6 of the report
[13] Para 3.16 of the report
[14] The Cadbury Report, titled Financial Aspects of Corporate Governance, is a report that is issued by “The Committee on the Financial Aspects of Corporate Governance” chaired by Adrian Cadbury that sets out recommendations on the arrangement of company boards and accounting systems to mitigate corporate governance risks and failures. The report was published in draft version in May 1992.
[15] Para 4.7 of the report
[16] Para1.2 of t
he report
[17] CGC, A.2.1
[18] CGC, A.3
[19] The CII Code is the first and a unique instance where an industry association took the lead in prescribing corporate governance standards for listed companies. In April 1998, it released a Task Force report entitled Desirable Corporate Governance: A Code, which has outlined a series of voluntary recommendations regarding best-in-class practices of corporate governance for listed companies. Most of the CII Code was subsequently incorporated in SEBI™s Kumar Mangalam Birla Committee Report and thereafter in Clause 49 of the Listing Agreement.
[20] Recommendation 7
[21] In 1999, SEBI had set up a committee under Shri Kumar Mangalam Birla, member SEBI Board, to promote and raise the standards of good corporate governance. The report submitted by the committee is the first formal and comprehensive attempt to evolve a ˜Code of Corporate Governance’, in the context of prevailing conditions of governance in Indian companies, as well as the state of capital markets, from the perspective of the investors and shareholders.
[22] Company Meetings: Law Practice & Procedure, Dr. K.R. Chandratre, All India Reporter Pvt. Ltd. 1st Edition, 2001
[23] Regulation 50, 51 and 52 of Table A
[24] Sec. 175(1) of the Companies Act, 1956 provides unless the articles of the company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the chairman thereof on a show of hands.
[25] [1980-84] LRC (Comm) 583 at 588
[26] A. Ramaiya: Guide to the Companies act, 17th Edn., 2010, Part 2 p. 2037
[27] Cornwall v. Woods, (1846) 4 Notes Cases 555
[28] (2010) 95 CLA 157 (CLB)
[29] Sec 175(2) and 175(3)
[30] A. Ramaiya: Guide to the Companies act, 17th Edn., 2010, Part 2 P. 237
[31] Horsley™s Meetings- Procedure, law and Practice, 4th edition, p 174
[32] R. v. Bradford Metropolitan City Council (1989) 3 ALL ER 156 (CA)
[33] Nell v. Longbottom, (1894) 1QB 767; Bishop of Chickester v. Harward, (1787) 1 T Rep 650.
[34] June 12, 1975 (unreported)
[35] (1977) 2 ACLR 406 (Autralia)
[36] (1989) 3 ALL ER 140
[37] (2005) 125 Com Cases 299
[38] Nell v. Longbottom (1894) 1 QB 767
[39] Wandsworth & Putney Gaslight Co. v. Wright, (1870) 22 LT 404
[40] Narayanan Chettiar (S. RM. S.T.) v. Kaleeswarar Mills Ltd., AIR 1952 Mad 515
[41] Wall v. Exchange Investment Corporation, (1926) Ch 143
[42] Re, Swadeshi Polytex Ltd., (1988) 63 Com Cases 709 (Del); sriram (TR) v. K. M. Duraibabu, (1994) 13 C.L.A. 115 at 120 (Mad-DB)
[43] 1991 BCLC 224 (Ch D)
[44] National Dwellings Society v. Sykes, (1894) 3 Ch 159 at 162
[45] (1969) 2 All ER 274 at 290-291
[46] Jackson v. Hamlyn; (1953) 1 ALL ER 887
[47] (1947) 2 ALL ER 680
[48] (1943) 2 ALL ER 567
[49] (2001) 4 Comp LJ 81
[50] Moorgate Mercantile Holdings Ltd., Re, (1980) 1 All ER 40
[51] Horbury Bridge Coal, Iron Waggon Co., (1879) 11 Ch D 109, 117 (CA)
[52] Torbock v. Lord Westbury (1902) 2 Ch 871
[53] (1996) 20 CLA 12 (Bom)
[54] Company Meetings: Law, Practice and Procedure, KR Chandratre, 2nd edition, 2009
[55] Thompson v. Times Newspapers Ltd., (1969) 3 All ER 648 (CA)
[56] Cf. Wall v. London and Northern Assets Corporation, (1898) 2 Ch 469 (CA)
[57] (1949) 19 Com Cases 175, 197 (Mad)
[58] Conduct of meetings by Curry and Sykes, 12th edition, p 19
[59] Sec 170(1)(ii)
[60] (2000) 36 CLA 153 CLB
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