Section 166 of the Companies Act, 2013
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 exercise 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 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) If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
Explanation
Section 166 of the Companies Act typically pertains to the duties of directors. It outlines the fiduciary duties of directors to act in good faith, with due care, skill, and diligence in the best interests of the company and its shareholders. Directors are expected to exercise their powers for proper purposes and to avoid conflicts of interest. They must also disclose any personal interests in transactions involving the company.
Furthermore, Section 166 may address the duty of directors to promote the success of the company, taking into account various stakeholders such as employees, customers, suppliers, and the community, as well as the long-term interests of shareholders.