Number of Directors:
According to section 149(1), every company shall have a Board of Directors consisting of individuals as directors.
A minimum number of directors:
in case of a Public Company - 3,
in case of a Private Company - 2, and
in the case of a One Person Company (OPC) - 1
Maximum number of directors: 15
Note: If the company wants to appoint more than 15 directors, it can do so after passing a special resolution
Types of Directors
1. Woman director
At least one-woman director shall be on the Board of 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.
2. Resident Director: Every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial However, in case of a newly incorporated company the above requirement shall apply proportionately at the end of the financial year in which it is incorporated. [Section 149(3)]
3. Independent Director: Prescribed large public companies are required to appoint independent directors on their Board with a view to boosting the level of corporate governance.
4. Interested Director: when an existing director becomes interested in a transaction of the company, he is called interested director; and he needs to disclose his interest at the appropriate forum and at an appropriate time.
5. Executive and Non-Executive Directors: The Board of Directors may comprise both executive and non-executive directors. The executive directors are responsible for managing different business operations undertaken by the company. It is their responsibility that the departments which they head operate smoothly. In contrast, the non-executive directors participate through Board meetings in discussions relating to framing of policies for the efficient management of the company. Independent directors are a type of non-executive directors. They are not as active as executive They are to be held liable only if they knowingly consented to the wrongful acts.
6. Rotational and Non-rotational Directors: In every public company, there is a legal requirement to have the 2/3rd of the total number of directors, excluding the independent & nominee directors of a Financial institution, as rotational directors. However, only 1/3rd of the rotational directors are liable to retire at every AGM. There is no restriction on reappointment. All other than rotational are Non-rotational directors. E.g. Independent directors are non-executive and non-rotational.
7. Small shareholder’s directors: Sec 151 a listed company may have one director elected by the small shareholders. This provision enables the small shareholders to place their representative on the Board of Directors of a listed company so that their voice is also heard effectively. The term “small shareholders” means a shareholder holding shares of the nominal value of not more than Rs 20,000 or such other sum as may be prescribed.
8. Additional Director: Section 161 of the Act provides for the appointment of additional director. With a view to meet urgent requirements of management, the Board of Directors is empowered to appoint any person as an additional director at any time if such power is granted by The notable point is that it is not Section 161 (1) but the articles which confer such power.
9. Alternate Director: Section 161 (2) of the Act provides for the appointment of alternate According to this section: 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 or holding directorship in the same company, to act as an alternate director for a director during his absence for a period of not less than three months from India.
10. Nominee Director Section 161(3) of the Act provides for the appointment of the nominee director. According to this section: Simply stated, a nominee director is not like any other director. He represents the body which makes his nomination for appointment as director in the company. Whenever a company obtains financial assistance from some financial institution or bank, such institutions invariably nominate its representative for safeguarding its interests till the loaned amount is completely repaid. The nominee director is expected to ensure that the terms of loan agreements are religiously complied with all the time by the company concerned which has been granted financial assistance. The Board of Directors (subject to the articles) is empowered to appoint a nominee director and the shareholders cannot interfere with such appointment. Further, by virtue of its shareholding in a Government company, the Central Government or the State Government may also nominate a person for appointment as nominee director and the Board shall have to follow the suit without any hindrance on its part.
11. 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. In other words, the Managing Director is a person who is entrusted with substantial powers of management of the affairs of the company. This position falls under the definition of “Key Managerial Personnel” under the Companies Act, 2013.
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