Directors are the members of the collective body known as the Board of Directors who are in charge of controlling, managing, and directing a company’s affairs. There can be various type of directors in a company depending upon the type, structure, and applicability of various laws.

Directors are considered trustees of the company’s property and money, and they also act as agents in transactions entered into on the company’s behalf.

Directors are expected to carry out their duties and obligations as rationally diligent individuals with skill, knowledge, and experience as the person carrying out functions of a director and of that himself.

He/she serves in a variety of capacities within the organization. As a result, a director serves in several capacities in a company: as an agent, an employee, an officer, and a trustee.

Every company must have at least three directors in the case of a public limited company, at least two directors in the case of a private limited company, and at least one director in the case of a one-person company, according to the law defined under section  149(1)of Companies Act, 2013.

A company can have up to 15 directors. The company could appoint more directors bypassing the special resolution in its general meeting.

TYPE OF DIRECTORS

1. Residential Director

According to the law, every company must appoint a director who has visited India and stayed for at least 182 days in the previous calendar year.

2. Independent Director

Independent directors are non-executive directors who help a company improve its corporate credibility and governance standards. In other words, an independent director is a non-executive director who does not have a relationship with a company that could influence his judgment.

The tenure of the Independent directors may be up to 5 years consecutively; however, they may be reappointed by passing a special resolution with disclosure in the Board’s report.

-Listed Public Company

Every listed public company shall have at least one-third of a total number of directors as independent directors. Any fraction contained in that one-third shall be rounded off as one.

-Unlisted Public Company

Public companies with paid-up share capital of  Rs. 10 crores or more or with a turnover of  Rs. 100 crore or more or with aggregate outstanding loans, debentures, and deposits, exceeding  Rs. 50 crore.

3. Small Shareholders Directors

A listed company may have a director elected by small shareholders upon the notice of at least 1000 small shareholders or 10% of the total number of small shareholders, whichever is lower.

4. Women Director

A company, whether private or public, would be required to appoint at least one female director if any of the following criteria were met:

The company is publicly traded, and its securities are traded on the stock exchange.

Such a company has a paid-up capital of Rs.100 crore or more and a turnover of Rs.300 crores or more.

5. Additional Director

The additional director is appointed at a board meeting by a resolution passed by the board or by a resolution circulated by the board. Additional directors can only serve until the upcoming annual general meeting of the company. If an AGM is not held, the director is deemed to resign on the last day on which the general meeting should have been held. An individual who is not a director may not be appointed as an additional director.

6. Alternate Director

In a Private Limited company, one of the types of directors is an alternate director. If any director is absent or on leave from India for a period of three months or more, the company may appoint another director in his place.

This type of director is known as an Alternate director. He can be appointed if the articles allow it or if a resolution is passed at a general meeting.

A person may not be appointed as an alternate director for an independent director unless he is qualified to serve as an independent director under the Companies Act of 2013. The alternate director shall not serve as an alternate director for any other director in the company.

An alternate director leaves his office when the original director returns to India, the original director’s tenure ends, the original director dies, the original director vacates his office, or the original director resigns from his position, and so on.

7. Nominee Directors

Any financial institution, central or state government, banks, certain shareholders, third parties through contracts, or any other person who recovers his interest can nominate a director to the board of directors. A nominee director is appointed as a result of a loan agreement or a government shareholding in a government company. Subject to the provisions of its articles of association, the Board may appoint a Nominee director.

8. Managing Director

The ability to make decisions is possessed by the company’s managing director. A Managing Director is required for any public company or subsidiary of a public company with a share capital of more than ten crore rupees.

9. Executive Director

Executive directors are those who work full-time for a company or are in charge of its day-to-day operations.

10. Non-executive Director

Non-executive directors are directors who do not hold any executive positions. Non-executive directors are appointed from outside the organization. They are unaware of the company’s day-to-day operations.

11. Professional Director

Professional directors are experts in various fields who are appointed as non-executive directors by the company. They provide advice to the board in an area in which they are knowledgeable.

12. Shadow Director

A person who is not appointed to the Board but whose instructions the Board is accustomed to follow is liable as a director of the company unless he or she is giving advice in his or her professional capacity.

13. Rotational Director

It is not required by law for private companies to appoint rotational directors unless the company’s Articles of Association require it. If the Article is silent, the shareholders appoint directors in a general meeting.

CONCLUSION

A  private limited business is a legal entity unto itself. The director works on its behalf and performs managerial responsibilities. He also makes decisions for the organization and ensures that it is compliant. The company is represented by the Board of Directors. A company’s directors cannot be a body corporate, an association, a limited liability partnership (LLP), or a business.

A director can only be appointed if they have obtained a Director Identification Number (DIN). A foreign national or a non-resident alien (NRI) can be appointed as a director. Although there is no age limit for directorships, minors are not permitted to serve as directors.

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