Types of Directors
Table of Content
- Introduction
- Woman Director
- Independent Director
- Alternate Director
- Additional director
- Small shareholders director
- Managing Director
- Conclusion
Introduction
A company is a separate legal entity. It is a separate person in the eyes of a Law but it doesn’t have any physical existence. It is managed by individuals called Directors. Directors are the individual appointed to manage the affairs of the company. They are responsible for the management of the company. A collective body of directors is called the Board of Directors. According to section 149(1), every company should have a board of directors consisting of only individuals as directors.
There are various types of Directors. Some of them are discussed briefly in this article.
Woman Director
Woman Empowerment is important. The companies act, 2013 made it mandatory for specific co. to have woman directors in their Board. Having both genders on the board will help the board to have a complete view. It will help them to discharge their responsibilities in a better way. At least one woman shall be on the Board of such class or classes of companies (Appointment and Qualifications of Directors) Rules, 2014.
The classes of companies who should have a woman Director is as follow:-
- Every Listed Company.
- Every other public company having-
- paid-up share capital of one hundred crore rupees or more; or
- turnover of three hundred crore rupees or more:
Independent Director
The concept of the company is growing day by day. Big businesses are running in the form of a Company. It will not be wrong to say, company’s contribution to the economy is crucial. Therefore, it is also important that there should be a person who does acts that are in the best interest of the company. For this, the individual needs to be an independent person who can fulfill his responsibilities without any personal benefit. So, provisions of Independent Director have been introduced.
The following class or classes of companies shall have at least two directors as independent directors –
(i) the Public Companies having paid-up share capital of ten crore rupees or more; or
(ii) the Public Companies having turnover of one hundred crore rupees or more; or
(iii) the Public Companies which have, in the aggregate, outstanding loans, debentures, and deposits, exceeding fifty crore rupees:
Provided that in case a company covered under this rule is required to appoint a higher number of independent directors due to the composition of its audit committee, such higher number of independent directors shall be applicable to it:
Alternate Director
A director is a very important person for the success of a company. There may arise a situation, where Director might be outside India for months. One can imagine the problems that can arise in the absence of directors. Therefore there is a provision of alternate Director in the companies act, 2013.
Therefore, as per section 161, the Board of Directors of a company may, if so authorized by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a person holding any alternate directorship for any other director in the company, to act as an alternate director for a director during his absence for a period of not less than three months from India:
It is important here to note that authorization by the article is a must for the appointment of an Alternate Director.
Additional director
The directors are appointed by the member except where mentioned otherwise. Anything which needs member approval is a lengthy process as compared to board approval. So, the Companies Act, 2013 provides the power to the board to appoint any person in the board. It should not be the backdoor for the person who has been failed to be appointed as a director in the General Meeting. Therefore, according to the provision of the companies act, 2013, the Board of directors can’t appoint a person who has failed to be appointed as a director in General Meeting.
In this case, also authorization by the article is a must for the appointment of an Additional Director.
Small shareholders director
“Small shareholders” means a shareholder holding shares of the nominal value of not more than twenty thousand rupees. A listed company may have one director elected by such small shareholders in such manner and with such terms and conditions as may be prescribed.
Managing Director
“Managing director” means a director who, by virtue of the articles of a company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called.
For this clause, the power to do administrative acts of a routine nature when so authorized by the Board such as the power to affix the common seal of the company to any document or to draw and endorse any cheque on the account of the company in any bank or to draw and endorse any negotiable instrument or to sign any certificate of share or to direct registration of transfer of any share, shall not be deemed to be included within the substantial powers of management;
Conclusion
There are various types of directors. Each type has been trusted with different responsibilities. All the directors must discharge their responsibility with utmost care. Directors should do all the acts as per the companies act, 2013.