1. Introduction to
Directors
( As Per Companies Act, 2013)
A.Albert Ravi,
AssistantProfessor,
Dept.ofCommerce,
St.Joseph’sCollegeof ArtsandScience(
Autonomous),Cuddalore-1.
2. Directors-Meaning and Definition
Directors are responsible for controlling, managing and directing
the over all affairs of a company.
01
He/She plays multiple roles in the company.
02
Hence, a director plays several roles in a company, as an agent,
as an employee, as an officer and as a trustee of the company
03
Section 2(34) of the Companies Act, 2013 defines
a ‘director’ to mean a director appointed to the Board of a
company.
3. Who can be a Director?
No. of
Directors
Minimum 2 – Pvt. Ltd.
Minimum 3 – Public Ltd.
Minimum 1 – OPC
A Company can have a
maximum of 15 directors.
An
Individual
only an individual can be
appointed as director(Sec-
149).
.
If more than
15 Directors
The company could
appoint more
directors by
passing the special
resolution in its
general meeting.
Sec-
153
No special resolution is
required in government
company and company
licenced under section 8 for
increasing more than 15
directors
No Body
Corporate..
Thus, no body corporate,
association or firm can be
appointed director of a
company.
DIN
However, no person shall be
appointed as a director of the
company unless he has been
allotted a Director Identification
Number (DIN)
.
Incase of
Govt. Co.
4. Notable Provisions
Sec. 165
of the
Companies
Act
Section
152(3)
Section
149(3)
•No person shall
be a director in
more than 20
companies.
•A director
cannot hold the
office for not
more than10 in
case of public
company.
Minor cannot be
a director
because of the
ineligibility to
obtain DIN
Atleast one
director has to
be an Indian
resident.
5. Qualifications & Disqualifications of Directors
A Person of Unsound Mind
Insolvent
Person applied for to be adjudicated as an insolvent and
his application is pending.
:
A person who has been imprisoned for more than 6
months and 5 years have not elapsed.
Court or Tribunal disqualifying such person .
A person who has not paid any call on share and 6
months have elapsed.
Convicted in offence of related party transaction in
preceding 5 years.
A person who has not been allotted with DIN.
The Companies Act, 2013 has not yet determined
any educational or professional qualifications of
directors.
The Act does not place qualifications for directors
Unless the Articles of Association contains a provision for
that, the director does not have to be a shareholder unless
he wishes to be one voluntarily. But articles usually
provide for a small portion of shares eligibility
Qualifications Disqualifications (Section 164)
6. Director as….
Directors may correctly be described as agents of the
company. Cairns, L.J. observed : “The company itself
cannot act in its own person; it can only act through
directors, and the case is, as regards those directors, merely
the ordinary case of principal and agent”.
The ordinary rules of agency will, therefore, apply to any
contract or transaction made by them on behalf of the
company.
Where the directors contract in the name and on behalf of
the company it is the company which is liable on it and not
the directors.
Directors as agents…..
Directors as Managing Partners…
. AGENTS, TRUSTEES AND MANAGING PARTNERS
A trustee is a person in whom is vested the legal
ownership of the assets which he administers for the
benefit of another or others.
Directors are regarded as trustees of the company’s
assets, and of the powers that vest in them because
they administer those assets and perform duties in the
interest of the company and not for their own
personal advantage
Director as Trustees…
•The persons holding this view consider a company as large partnership, directors being
charged with the responsibility of managing the affairs. The other shareholders are
virtually dormant partners.
• By virtue of the various provisions in the Memorandum and Articles, they enjoy vast
powers of management and act as the supreme policy and decision making body.
7. Types of Directors…
Independent Director
Women Director
Additional Director
Alternate Director
60%
40%
30%
50%
Residential Director
Independent Director
Nominee Director
Executive Director
Small Shareholders
Director
Non Executive
Director