Section 204 — Duties of directors

(1) Subject to the provisions of this Act, a
director of a company shall act in accordance with the articles of the company.

(2) 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 environment.
(3) A director of a company shall discharge his duties with due and
reasonable care, skill and diligence and shall exercise independent judgment.
(4) A director of a company shall not involve in a situation in which he
may have a direct or indirect interest that conflicts, or possibly may conflict, with
the interest of the company.
(5) A director of a company shall not achieve or attempt to achieve any
undue gain or advantage either to himself or to his relatives, partners, or associates
and if such director is found guilty of making any undue gain, he shall be liable to

40 Substituted words “must be a facsimile of the company’s common seal, with the addition on its
face of” vide the Companies (Amendment) Act, 2021 dated 1st December, 2021.
41 Omitted vide the Companies (Amendment) Act, 2021 dated 1st December, 2021. The omitted sub-
section (3) was read as under:
“(3) The official seal when duly affixed to a document has the same effect as the
company’s common seal.”
42 Omitted expression “, by writing under its common seal,” vide the Companies (Amendment)
Act, 2021 dated 1st December, 2021.
43 Omitted expression “as if it had been sealed with the common seal of the company” vide the
Companies (Amendment) Act, 2021 dated 1st December, 2021.

pay an amount equal to that gain to the company.
(6) A director of a company shall not assign his office and any
assignment so made shall be void.
(7) In addition to the preceding sub-sections, the Commission may
provide for the extent of duties and the role of directors as may be specified.
(8) Any breach of duty, default or negligence by a director in
contravention of the articles of the company or any of its policy or decision of
the board may be ratified by the company through a special resolution and the
Commission may impose any restriction as may be specified.
(9) Without prejudice to any other action that may be taken under this
Act or any other law, any contravention or default in complying with requirements
of this section shall be an offence liable to a penalty of level 1 on the standard scale.