Who is Director in a Company?

Director is an individual who directs, manages, oversees or controls the affairs of the Company.

He is a person appointed to the Board of a company to perform the duties and functions of a company in accordance with the provisions of The Company Act, 2013.

Director of a company is a natural person elected by the shareholders as per the Memorandum of Association and Articles of Association of the company.

The Board of Directors means a group of those individuals elected by the shareholders of a company to manage the affairs of the company.

Minimum number of director based on the type of the company :

Necessity / Reasons of appointing an additional Director in a company :

The following are the circumstances in which Addition / Appointment of a Director would be necessary:
When there is sudden death or plans of retirement / resignantion or other personal reasons, if the existing Directors are unable to work for a long time, in such cases appointing an additional director is necessary to meet the statutory limit of the company.

For the growth of business, it is necessary to hire new talent in the management of the company.

In case where there is new product line or department added in the company, then to lead the team, appointing an expert as a director is necessary.

When the specified statutory number of directors reduces, then it is mandatory for a company to appoint a new director.

To help the shareholders assign more operational responsibilities without losing any strategic control.

Eligibility criteria for a person to be appointed as director in a company :

The person appointed must be eligible as per the relevant clauses in the Articles of Association.

The proposed individual must be above the age of 18 i.e. a major.

He or she must qualify as per the laws mentioned under the Companies Act, 2013

The Members of the Board must consent to the appointment of the proposed individual in which he seeks to get appointed as director.

It must be noted that the Companies Act does not mention any educational qualification in order to be eligible to become a Director.

Indian National, Non-Resident Indians, and Foreign Nationals can be appointed as a director in India.

Types of Directors

Managing Director

Managing Director is a Director, who by virtue of AOA of a company or an agreement with the company or a resolution passed in its general meeting, or by its BoD, is given substantial powers of management of affairs of the Company.

Executive Director

The Executive Director is the director, who is in full-time employment of the company. This is the reason that the executive directors are mainly engaged in the core management of the company and managing affairs of the company.

Additional Director

The Directors in all the existing companies are first registered as additional directors. This appointment of Additional Director is done by the Board of Directors. They can hold a meeting up to the next general meeting.

Alternate Director

Alternate Director is someone appointed for a person who is a Non-Resident Indian or Foreign Collaborators of a company by the Board of Directors to act for the original director during his absence for a period of more than three months.

Ordinary Director

The Ordinary Director is the Director who attends the Board Meetings of the Company and participates in the matters put across the Board of Directors. They are neither whole-time Directors nor Managing Directors for the company.