Directors

A company is an artificial judicial person with its own unique entity that is constituted by law. Despite having the characteristics of a distinct legal entity, the firm is unable to make choices on its own. The company's directors play the most important role in this situation.

Directors serve as a company's eyes and brain. A person must have knowledge of the industry to which the company belongs in order to do all necessary tasks and make all necessary decisions. But in addition to this, there are several conditions that must be followed in accordance with the laws in effect in our nation.

With a number of landmark rulings for greater comprehension, this article provides a comprehensive review of practically all the requirements, compliances, and regulations that a company or a director must abide by and follow while dealing with issues relating to a directorship in a corporation.

TYPES OF DIRECTORS

1. FIRST DIRECTOR - The first directors are those who have been in place when the firm was incorporated. In public, private, and one-person companies, minimum director requirements are 3, 2, and 1, respectively.

2. EXECUTIVE DIRECTOR – A full-time employee of a firm, an executive director is a director.

3. NON-EXECUTIVE DIRECTOR – A non-executive director is a functioning director who is not an executive director of the organisation.

4. RESIDENT DIRECTOR: To qualify as a resident director, a corporation must have at least one director who has spent at least 182 days in India during the previous calendar year.

5. WOMEN DIRECTOR: It is mandatory for all publicly traded firms and public companies with paid-up capital of at least Rs. 100 crore OR with a revenue of at least Rs. 300 crore to appoint a woman director to their board of directors.

 6. ADDITIONAL DIRECTOR—An additional director is a director who is appointed in a board meeting (as opposed to someone who is not appointed in the general meeting) and who serves until the following annual general meeting, or until the deadline by which the AGM should have been held, whichever comes first.

 7.ALTERNATE DIRECTOR—An alternate director is a director who has been designated to fill in for a director who has been absent from India for at least three months. 

However, a director of the same firm who also serves as a director's alternate is not eligible to be appointed as a director's alternate.

A shareholder who owns shares with a nominal value of up to 20,000 rupees (or another specified amount) is considered a small shareholder.

10. DIRECTOR IN CASUAL VACANCY - A director in casual vacancy is appointed to replace a director who leaves his position before serving out the remainder of his term and was elected at a general meeting.

11. PROFESSIONAL DIRECTOR - A director may be appointed as a professional director if they have knowledge and skills in a particular field and are able to contribute to the board's decision-making.

12. INDEPENDENT DIRECTOR - A director who has no material or financial interest in the firm or with the directors is considered to be independent. This excludes managing directors, whole-time directors, and nominee directors. Due to scams committed by Indian company boards, this type of director is receiving a lot of attention these days.

13. SHADOW DIRECTOR: Although this type of director is not formally appointed, the company's board follows his instructions.

14. DE-FACTO DIRECTOR—A de facto director serves without being elected as one, yet he is nevertheless held responsible by the firm for his deeds while serving in that capacity.

Poonam Sharma