Question

State the following statement is True of False.

The Board of Directors are the representatives of the shareholders.

• A. True
• B. False

Answer 1

The correct option is A True

This statement is True because of the following reasons:

(i) The shareholders are scattered all over and it becomes difficult for them to manage the affairs of the company.

(ii) Often, many a times decision cannot be taken without the consent of the shareholders.

(iii) In such cases, a lot of times is wasted as all shareholders do not come together at the same time and it involves delay in delay in decision making.

(iv) So, shareholder elect their representatives known as Board of Directors.

(v) This Board of Directors manages the affairs of the company on behalf of the shareholders.

(vi) Shareholders are responsible for directing , governing and controlling the policies of the company.

(vii) Thus, the Board of Directors are the representatives of the shareholders.