Amit Agrawal
My brother is a co-opted technical director (one of the two expert directors) of a multi-state scheduled bank in Maharastra. I request your guidance on following queries :
1. Whether co-opted director has the same responsibilities as an elected director or there is some difference in the responsibility in view of the fact that he is not entitled to vote.
Please elaborate.
2. In the said bank, CEO is designated as Managing Director and is ex-officio member of the board of directors as per bye-laws. Real brother of the CEO is consultant of the bank and is being regularly awarded with work of the bank even after promotion of his brother as Managing Director. As per bye-laws remuneration of any type of consultancy services is to be fixed by the board. In view of these facts, will you please clarify on following?
1.Whether the Managing Director will come under the definition of Director of the bank.
2.Whether the other members of the board of directors can land in trouble for works being allotted to the real brother of the managing director.
3.As per provisions of Section 43 (b) of Multi-State Co-operative Societies Act, 2002, whether the managing director of the bank can be dis-qualified.
I will be extremely grateful if you can share your thoughts on the subject-matter,
I C Naik
Section 73 AAA (2) of the M. C. S. Act 1960 as inserted by the Maharashtra Cooperative Societies (Amendment) Act 2013authorizes every cooperative society to coopt a person having experience in the field of banking, management, finance as an expert director with a proviso that such expert directors shall not have the right to vote at any election of the society and shall not be eligible to be elected as office bearers of the committee.
Such members are no different from any other member of the managing committee / Board.
Liability of such expert directors are also the same as other board members laid down in “Section 73 (1AB) which provides that the members of the committee shall be jointly and severally responsible for all the decisions taken by the committee during its term relating to the business of the society. The members of the committee shall be jointly and severally responsible for all the acts and omissions detrimental to the interest of the society.
Provided that, before fixing any responsibility mentioned above, the Registrar shall inspect the records of the society and decide as to whether the losses incurred by the society are on account of acts or omissions on the part of the members of the committee or on account of any natural calamities, accident or any circumstances beyond the control of such members:
Like any other director there is a provision which helps him to protect himself against any liability devolving on account decisions in which he has not been a party directly or indirectly in this manner viz;-
1. Any member of the committee, who does not agree with any of the resolution or decision of the committee, may express his dissenting opinion which shall be recorded in the proceedings of the meeting and such member shall not be held responsible for the decision embodied in the said resolution or such acts or omissions committed by the committee of that society as per the said resolution.
Such dissenting member, if he so desires, may also communicate in writing his dissenting note to the Registrar within fifteen days from the date of the said resolution or decision.
2. Any member, who is not present for the meeting in which the business of the society is transacted, and who has not subsequently confirmed the proceedings of that meeting, such member shall also not be held responsible for any of the business transacted in that meeting of the society.”
Functional Directors are defined under Section (14-A).
“functional director” means a Managing Director or a Chief Executive Officer by whatever designation called, and includes any Head of the Department, workman or representative of the recognised union of the concerned society, nominated by the Committee.
“Functional director” appointed as Managing Director is a member of the Board. He is equally liable for losses in exactly the same manner as Expert Director.as discussed above. He can take security measures also the same way.