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General Motors Case Study

1277 Words6 Pages

Directors are the people trusted with the running of the organisation. They are expected to guide the company in the right direction both legally and financially. Being the trustees, directors are exposed to liabilities as a consequence of a breach of their duties. The liabilities of directors is stated under different laws in the Indian Constitution. Different laws and acts provide the frame work for under which directors need to act and failing which they are liable for it. Whenever any company does anything wrong or against the law, the people held accountable are the ones who were running the company at the time of committing the wrong. Directors could also be penalised for not doing their duties properly or according to the law or for …show more content…

The directors of Toyota Motors India were held responsible for the dead of one individual when the airbags in his car did not work. The case was dropped only after the company agreed to compensate the family of the deceased. Not only can lawsuits be filed against the directors by outsiders, it can be filed by the company itself and even the shareholders. A shareholder lawsuit was filed against General Motors that alleged the board of directors did not perform its duty in preventing the mounting losses from the sale of vehicles with faulty and deadly ignition switches. In Iredand a legal action against four former directors of the Irish Nationwide Building Society had to be settled out of court. This was done when a group of shareholders accused the directors for the loss incurred by the company due to the non profitable investments made by the board. In India , when a bus belonging to Orbit Transportation Company was involved in a hit and run case , the opposition parties demanded the removal and arrest of the Deputy Chief Minister of Punjab who happened to be a director of the …show more content…

Chit funds seem to be an easy way for fraudsters to make money. Most chit fund companies that are involved in scams have a similar story. The companies are started by fraudsters. They then rope in respectable people as directors in order to bring credibility to the company and attract investment. Once people invest money , they run away with all the money. Leaving the honest directors to face the lawsuits and the liabilities. This was the case with the directors of Realcon Ltd. Sometimes directors can land in trouble for smallest of mistakes. The directors of Shasun Chemicals and Drugs Ltd experienced that first hand when an FIR was slapped against them for a cheque dishonouring

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