Type of Directors in a Company in India

[Ishita Ramani]

Introduction

This blog provides information on the various types of Directors in a private limited company, and the different types of Directors in the Companies Act, 2013. Directors are in charge of overseeing, controlling, and directing a company’s operations. He or she has many duties within the company. As a result, a Director acts as an employee, agent, trustee, and officer of a company.

What are Directors?

“Directors” refers to the members of the Board of Directors who are in charge of supervising, managing, and directing a company’s operations. Directors operate as trustees for the assets and money of the firm and as its representatives in business dealings.

Different Types of Directors in a Company

The following are the different types of Directors in a Company in India:

1. Executive Directors

He or she works as the company’s director full-time. The company has higher expectations of them. In all interactions between the company and its employees, they must be effective and careful.

2. Non-Executive Directors

He or she is a non-working director who does not take part in the company’s daily operations. They may get an invitation to take part in the development of plans or policies. They push the executive directors to come up with choices and solutions that are in the best interests of the business.

3. Shadow Directors

A person who is not appointed to the Board but whose orders the board is used to acting on is liable as a director of the company unless he or she is giving advice in his or her professional function.

4. Certified Directors

Professional directors are non-executive directors recruited by the company who are experts in different fields. In their areas of expertise, they give advice to the board.

5. Managing directors

The company’s managing director has the power to make decisions. A managing director is required for any public company or subsidiary of a public company with a share capital of more than five crore rupees.

6. Residents Directors

According to the law, every company must appoint a director who has spent at least 182 days in India during the course of the previous calendar year.

7. Additional Directors

An additional director is appointed at a board meeting by the adoption of a board resolution or a resolution by circulation. The appointment of additional directors is limited to the period following the company’s subsequent Annual General Meeting (AGM). The director is deemed to have resigned on the final day of the general meeting’s scheduled date if the AGM is not called. An additional director cannot be someone who hasn’t previously served on the board of directors.

8. Initial Director

The first directors’ names appear in the Articles of Association (AOA). In accordance with Regulation 60 of Table F of the Companies Act, 2013, the subscriber to the memorandum or a majority of them shall choose the name of the first directors in writing.

9. Nominee director

A director may be appointed to the board of directors by any financial institution, the state or federal government, financial institutions, some shareholders, third parties through contracts, or any other person who has a claim to his interest. The appointment of a nominee director is necessary for any loan agreement or government investment in a government company. The Board has the authority to designate a Nominee director, subject to the conditions of the Articles of Association.

10. Alternate Director

An alternate director is one of the different sorts of director of a private limited company. If a director is away or out of the country for longer than three months, the company may appoint another director in his place. This kind of director is known as an alternate director. He can be appointed if the provisions of the AOA allow it or if a resolution is presented at a general meeting.

11. Rotational Directors

Private Companies are not obliged by law to appoint rotational directors unless specifically stated in the articles of association. Directors are nominated by the shareholders at a general meeting if the AOA (Article of Association) is silent about it.

Summary

A corporation can only operate through its directors, who have been referred to as the brains of the company. All of these directors serve as ambassadors for their companies, and their contributions are essential for the success of the company. The Board of Directors now has certain rights under the Act, 2013 enabling them to commit to the company fully.

The Act provides numerous restrictions in addition to the right to avoid abuse of these authorities. Directors hold a variety of roles and authority within companies. A transparent system is easier to maintain when powers are separated. The division of control also promotes efficiency and prevents the abuse of power.