Types of Directors in a Company, Company Law Notes CBCS Pattern

Types of Directors in a Company
Company Law Notes CBCS Pattern

Types of Directors in a Company

Following are the categories of directors who constitute ‘Board’ of a Company:

1) Ordinary directors: Ordinary directors are also referred to as simple director who attend board meeting of a company and participate in the matters put before the board. These directors are neither whole time directors nor managing directors.

2) Managing Director: According to Sec.2 (54) of the Indian Companies Act “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.

3) Whole-time directors: A whole-time executive director includes a director in the whole-time employment of the company.

4) Additional Director: Section 161 (1) provides that the articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time. Such director shall hold office up to the date of the next annual general meeting or the last date, on which the annual general meeting should have been held, whichever is earlier.

5) Alternate director: The Board Meeting may be held at a time when a director is, absent for a period of more than three months from the state and in such a situation, an ‘alternate director’ is appointed. The Board of Directors can appoint the additional director in the absence of a director if so authorized by articles or by a resolution passed by the company in general meeting. The alternate director shall work until the original director return or up to the period permitted to the original director.

6) Professional Directors: Any director possessing professional qualifications and do not have any pecuniary interest in the company are called as “professional directors”.

7) Independent directors: Sec. 2(47) defines independent directors to mean an independent director referred to in Sec. 149(5).

8) Nominee Directors: The banks and financial institutions which grant loans to a company generally impose a condition as to appointment of their representative on the board of the concerned company. These nominated persons are called as nominee directors.

9) Small shareholders directors: A small shareholder is one who holds shares of nominal value of Rs. 20,000 or less. Such shareholders will be able to participate in the election of directors for the small shareholders.

10) Resident director: According to Sec 149 (3) of the Companies Act’ 2013 every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year. Such directors are called resident directors.