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    Question

    Consider the following statements regarding the duties

    of directors under Sections 166-167 of the Companies Act, 2013: Statement 1: A director must avoid conflicts of interest between personal activities and company interests. Statement 2: A director shall not gain undue advantage or allow relatives to gain advantage through the directorship. Statement 3: A director cannot assign his office; any assignment made is void. Statement 4: The company can indemnify a director for loss arising from criminal acts committed by the director in their capacity as director. Which statements are correct?
    A Statements 1, 2, and 3 only Correct Answer Incorrect Answer
    B Statements 1 and 2 only Correct Answer Incorrect Answer
    C Statements 2 and 3 only Correct Answer Incorrect Answer
    D Statements 1, 2, 3, and 4 only Correct Answer Incorrect Answer
    E Statements 1 and 4 only Correct Answer Incorrect Answer

    Solution

    Sections 166-167 address directors' duties and liabilities. Statement 1 is correct—Section 166(4) requires avoiding conflicts of interest. Statement 2 is correct—Section 166(5) prohibits undue gain by the director or relatives. Statement 3 is correct—Section 166(6) explicitly states office cannot be assigned and any such assignment is void. Statement 4 is incorrect—Section 167 provides that indemnification cannot extend to criminal acts or intentional fraud; the company can only indemnify for innocent breaches. Statements 1, 2, and 3 are correct.

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