14 July 2009
We all are aware of the term ‘as defined in section 7 of Act, What does the term ‘person’ includes in that section, only individual or other persons also.
What are the provisions of companies act which applicable to a director is also applicable to deemed director.
Kindly appreciate first Section 7 is a kind of exception to section 5(e).
The word person used in section 7 is a very comprehensive word. As per my opinion it includes other person like corporate etc along with individual. For example the board of directors may be accustomed to act in accordance with the directions and instructions of a company due to various presumable reasons.
Further it is very difficult to say which provision of companies act applicable to such deemed director and which is not. But as per my opinion almost all the provisions of Companies Act, 1956 which are applicable to a director are also applicable to deemed directors.
As per section 253 only individual can be director. so how can the term person (used in section 7) includes a company or other body corporate.
In terms of second question , I mean to say that as we know deemed director need not to hold Qualification shares , but normal director(i used the term Normal director which means director other then deemed director)need to hold qualification share. Similarly is there is any other provision not applicable to deemed director .
15 July 2009
I fully understand your point of view.
If you think “a person” u/s 7 is equal to “deemed director” u/s 5 (e) in 100% cases, then as per my opinion you are restricting the scope of section 5(e) and section 7.
If we follow the literal interpretation of the above sections then it would be like rejecting the intention of law. Further Deemed/shadow Director is a wider term as compare to a Director at least for interpreting the scope of section 5(e) and section 7.
Regarding your second question I would disagree with your line “but normal director need to hold qualification share.”
Here I would say a normal director is also not required to hold qualification share unless required by articles u/s 270. There may be some provisions not applicable to deemed directors on case to case basis. On such provisions I would prefer to have a discussion with my fellow colleagues as and when such situation occurs.
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