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Directors

Directors are required by law in companies. A public company requires a minimum of 3 directors, a private company requires 2 directors, and a one-person company requires 1 director. The maximum number of directors allowed is 15. There are several types of directors including residential directors who must remain in India for at least 182 days, independent directors for certain large companies, small shareholder directors, women directors for large listed companies, additional directors, alternate directors, shadow directors, and nominee directors appointed by stakeholders. The board of directors can initially be the subscribers in the memorandum if not specified otherwise in the articles. Directors are usually appointed by shareholders at a general meeting along with furnishing their DIN, declaration of no

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25 views

Directors

Directors are required by law in companies. A public company requires a minimum of 3 directors, a private company requires 2 directors, and a one-person company requires 1 director. The maximum number of directors allowed is 15. There are several types of directors including residential directors who must remain in India for at least 182 days, independent directors for certain large companies, small shareholder directors, women directors for large listed companies, additional directors, alternate directors, shadow directors, and nominee directors appointed by stakeholders. The board of directors can initially be the subscribers in the memorandum if not specified otherwise in the articles. Directors are usually appointed by shareholders at a general meeting along with furnishing their DIN, declaration of no

Uploaded by

SUSHMA MURALIE
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Directors required in a company are given in 

Section 149(1)(a) and sub-clause


(b);
a.) Three directors – public company
b.) Two directors – private company
c.) One director – in a one-person company

Provided: a Maximum number of directors can be 15. (a company can have more
than 15 directors but only after passing a special resolution.)

Types of Directors
1. Residential director – according to Section 149(3) of the Companies Act,
2013, each company shall have a director who has remained in India for 182
days or more.
2. Independent director – According to Section 149(6), an independent director
is an alternate director other than a Managing Director/Whole Time
Director/Nominee Director. As indicated by Rule 4 of Companies Rules,2013
(Appointment and Qualification of Directors) these are the following type of
companies which have to appoint a minimum two independent directors:
a.) Public Companies which have a turnover of Rs.10 Crores or More;
b.) Public Companies which have revenue of Rs.100 Crores or More
c.) Public Companies which have total outstanding loans, debenture, and
deposits of Rs. 50 Crores or More.
3. Small Shareholders Directors – Small shareholders can appoint a single
director in a listed company, but this activity needs an appropriate technique
like passing over a notice to at least 1000 Stakeholders or 1/10th of the entire
investors.
4. Women Director – As per Section 149 (1) (a), there are certain classifications
according to which there ought to be one woman as a director on the Board.
Any listed public company having;
a.) Turnover of Rs. 100 crores or more,
b.) Revenue of Rs. 300 crores or more.
5. Additional Directors – Any Individual can be delegated as Additional
Directors by a company under Section 161(1) of the Companies Act, 2013.
6. Alternate Directors – As per Section 161(2), a company may appoint an
alternate director if the articles present such power on the company or a
resolution is passed (if a Director is absent from India for at least three
months). There are some conditions also, like;
a.) An alternate director cannot hold the office longer than the term of the
director.
b.) An alternate director has to vacate the position immediately when the
original director returns.
7. Shadow Director – A person who is not selected in the Board but on whose
directions the board may act and has some power to run it can be appointed
as the director but according to his wish.
8. Nominee Directors – They can be chosen by individual stakeholders, third
parties through contracts, lending public financial institutions or banks, or by
the Central Government in case of oppression or mismanagement.

Appointment of the Board of Directors


1. If there is no provision for appointment of Director in the Articles of the
company, the subscribers to the memorandum that are the shareholders shall
be deemed to be the first directors of the company until the directors are duly
appointed. (in the one-member company, an individual is a member in
Accordance would be its first director)
2. Director is appointed by the general meeting. If it is done in this way, a
statement for such appointment, annexed to the notice for the general
meeting, shall include a statement that according to the Board, he
accomplishes the conditions specified in this Act for such an appointment
3. The proposed Director has to furnish his DIN (Director Identification Number)
mandatorily. DIN is allotted by the Central Government on application by a
person intending to be the Director of a company. DIN can be obtained in
pursuance of Section 153 and 154 of the Companies Act, 2013.
4. The proposed Director has to furnish a declaration stating that he is not
disqualified to be a director.
5. Furthermore, such appointment ought to be with his permission. Before the
new Companies Act, 2013 such consent was not obligatory for private
companies. Consent has to be filed with the Registrar of Companies within 30
days of appointment.

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