What are the duties of directors in ailing hotel companies?

ELP’s Sujjain Talwar (Senior Partner) and Megha Agarwal (Principal Associate) have authored an article on for ET Hospitality on “What are the duties of directors in ailing hotel companies?”. This article has been written against the backdrop of the resignations tendered by the Independent Directors of Asian Hotels (West) Limited.

This article discusses Section 166 (2) of the Companies Act and the broadened scope of duties of Directors, Schedule 5 of the Companies Act which offers guidance to Independent Directors in the manner in which they are to conduct themselves and the level of protection offered to Independent Directors under Section 149(12) of the Companies Act and Regulation 25(5) of SEBI’s LODR Regulations. The authors also comment on an important aspect which all Directors ought to bear in mind –i.e. whether the company meets the insolvency test.

The article then touches upon the way forward and the cautionary measures which Directors should adopt.