Under Section 166(2) of the Companies Act, 2013, directors must act in good faith to promote the…
Section 166(2) requires directors to act in good faith to promote the company’s objects for the benefit of its members as a whole. It also directs directors to act in the…
Choose your answer
Under Section 166(2) of the Companies Act, 2013, directors must act in good faith to promote the company’s objects for whose benefit?
Answer and explanation
Correct answer A
Section 166(2) requires directors to act in good faith to promote the company’s objects for the benefit of its members as a whole. It also directs directors to act in the best interests of the company, its employees, shareholders and the community, and to protect the environment. These duties do not turn the Central Government or the National Company Law Tribunal into beneficiaries of the duty to promote the company’s objects.
Option feedback
Option A
The statute identifies the members as a whole as the beneficiaries of this duty.
Option B
The community’s interests appear separately in the provision. The promotion of the company’s objects is for the members’ collective benefit.
Option C
Section 166(2) identifies the members as a whole for this purpose.
Option D
The National Company Law Tribunal is an adjudicatory body. Section 166(2) identifies the members as a whole for this duty.
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