Answered: Why there is a need to have a…

Why there is a need to have a provisional director? What is his role in settling the occurrence of deadlock in a close corporation?

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter5: Corporate Ethical Governance & Accountabililty

Section: Chapter Questions

Problem 13Q

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Question

Why there is a need to have a provisional director? What is his role in settling the occurrence of deadlock in a close corporation?

Expert Solution

Step 1

Provisional Director is appointed by the Superior Court of a country. There are two conditions in which a provisional director is appointed:-

When there is a deadlock of Board and subject of section 308A. This needs an even number of directors on the board and where directors do not agree with the management of the company regarding the company's issues. Generally, a person is appointed in order to look if company assets are getting impaired or losses and Business is no longer in advantage.
2nd Situation is subject to section 308B wherein deadlock, shareholders are unable to appoint to director in an annual general meeting.

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