TYPES OF DIRECTORS

•    DIRECTORS PART 1
COMPANIES ACT 2013
TYPES OF DIRECTORS

•    COMPANY LAW

•    DR SHASHI AGGARWAL ( ASSTT PROFESSOR ,USBS ,PUNJABI UNIVERSITY)

•    DIRECTORS

1.        A COMPANY IS A CORPORATE BODY. IT IS NEITHER A BODY NOR MIND OF ITS OWN. IT IS AN ARTIFICIAL BEING WHICH IS RUN BY LIVING PERSONS.

2.       EVERY COMPANY CONSISTS OF A DIRECTOR OR BOARD OF DIRECTORS TO RUN OR ADMINISTER THE COMPANY, DIRECTORS LOOK AFTER THE AFFAIRS OF THE ESTABLISHMENT. DIRECTOR IS A PERSON APPOINTED OR ELECTED ACCORDING TO THE LAW OF AUTHORISED TO MANAGE THE COMPANY.

•    BOARD OF DIRECTORS SEC 2(10)

1.       BOARD OF DIRECTORS MEANS THE COLLECTIVE BODY OF THE DIRECTORS OF THAT COMPANY. IT DIRECTS, CONTROLS, MANAGE AND SUPERINTENDS THE AFFAIRS OF A COMPANY.

2.       DIRECTORS CAN EXERCISE POWER ONLY WHEN THEY ACT COLLECTIVELY.

•    DIRECTORS

1.       DIRECTORS REFERS TO PART OF THE COLLECTIVE BODY : THE BOARD OF DIRECTORS THAT IS RESPONSIBLE FOR CONTROLLING,MANAGING AND DIRECTING THE AFFAIRS OF THE COMPANY,

2.       CONSIDERED THE TRUSTEE OF THE COMPANY’S PROPERTY AND MONEY AND THEY ALSO ACT AS THE AGENTS IN TRANSACTION WHICH ARE ENTERED INTO BY THEM ON BEHALF OF THE COMPANY.

•    MEANING OF DIRECTOR

•    SEC 2(34) OF THE COMPANIES ACT 2013, DIRECTOR MEANS A DIRECTOR APPOINTED TO THE BOARD OF A COMPANY.

•    DEEMED DIRECTORS: - A PERSON IN ACCORDANCE WITH WHO’S DIRECTIONS AND INSTRUCTIONS THE BOARD OF DIRECTORS OF THE COMPANY IS ACCUSTOMED TO ACT SHALL BE DEEMED TO BE DIRECTOR OF THE COMPANY. THESE ARE KNOWN AS SHADOW DIRECTOR

•    POSITION OF DI RECTOS AS AGENTS OR TRUSTEE

1.       DIRECTORS CAN BIND THE COMPANY AS AGENTS ONLY WHEN THEY ACT COLLECTIVELY AS A BOARD OF DIRECTORS. THE DIRECTORS OWE A DUTY TO THE COMPANY AS WHOLE

2.       DIRECTOR OF THE COMPANY HOLD THE POSITION OF TRUST AND MUST CONFORM TO PROVISIONS OF COMPANY LAW OR STATUTES.

3.       DIRECTORS LIKE TRUSTEES OCCUPY A FIDUCIARY POSITION. ALMOST ALL THE POWERS OF DIRECTORS ARE POWER IN TRUST. THE POWER TO MAKE CALLS OR TO FORFEIT SHARES ,TO ISSUE FURTHER CAPITAL,GENERAL POWER OF THE MANAGEMENT ARE ALL POWERS IN TRUST WHICH HAVE TO BE EXERCISED IN GOOD FAITH OR THE BENEFITS OF THE COMPANY AS WHOLE DIRECTOR ARE TRUSTEES OF THE COMPANY AND NOT OF INDIVIDUAL SHAREHOLDER.

4.       THE MODERN DIRECTORS ARE MORE THAN AGENTS OR TRUSTEES OF THE COMPANY

5.       THE BOD ARE THE BRAIN AND ONLY BRAIN OF THE COMPANY WHICH IS BODY AND THE COMPANY CAN AND DOES ACT ONLY THROUGH THEM.

•    TYPES OF DIRECTORS

•    FIRST DIRECTORS: AS PER SECTION 152(1) OF THE COMPANIES ACT.2013, THE FIRST DIRECTORS OF THE COMPANY ARE TO BE APPOINTED BY THE SUBSCRIBERS OF THE COMPANY. LISTED IN THE ARTICLES OF THE COMPANIES AND IF THEY DO NOT APPOINT NY ALL THE SUBSCRIBERS WHO ARE INDIVIDUALS BECOME DIRECTORS.THE FIRST DIRECTOR HOWEVER HOLD THE OFFICE ONLY UPTO THE DATE OF THE FIRST ANNUAL GENERAL MEETING OF THE COMPANY.

•    DIRECTORS (ELECTED DIRECTORS):-ACCORDING TO SECTION 152(2) EVERY DIRECTOR SHALL BE APPOINTED BY THE COMPANY IN GENERAL MEETING.

•    RESIDENTIAL DIRECTOR: EVERY COMPANY NEEDS TO APPOINT A DIRECTOR WHO HAS BEEN IN INDIA AND STAYED FOR NOT LESS THAN 182 DAYS IN A PREVIOUS CALENDER YEAR.

•    SMALL SHAREHOLDER DIRECTORS:- A LISTED COMPANY COULD UPON THE NOTICE OF MINIMUM 1000 SMALL SHAREHOLDERS OR 10% OF THE TOTAL NUMBER OF THE SMALL SHAREHOLDER WHICHEVER IS LOWER SHALL HAVE A DIRECTOR WHICH WOULD BE ELECTED BY SMALL SHAREHOLDER

•    INDEPENDENT DIRECTOR:- ARE NON EXECUTIVE DIRECTORS OF A COMPANY AND HELPS THE COMPANY TO IMPROVE CORPORATE CREDIBILITY AND ENHANCE THE GOVERNANCE STANDARDS

•    NON EXECUTIVE DIRECTOR WITHOUT A RELATIONSHIP WITH THE COMPANY WHICH MIGHT INFLUENCE THE INDEPENDENCE OF HIS JUDGMENT

•    THE TENURE OF THE INDEPENDENT DIRECTORS UP TO 5 CONSECUTIVE YEARS. BUT THEY ARE ENTITLED TO REAPPOINT BY PASSING A SPECIAL RESOLUTION WITH THE DISCLOSURE IN THE BOARD’S REPORT.

•    FOLLOWING COMPANIES NEED TO APPOINT AT THE LEAST TWO INDEPENDENT DIRECTORS:-

1.       PUBLIC COMPANIES WITH PAID UP CAPITAL OF INR 10 CRORE OR MORE

2.       PUBLIC COMPANIES WITH TURNOVER OF RS INR 100 CRORES OR MORE

3.       PUBLIC COMPANIES WITH TOTAL OUTSTANDING LOANS, DEPOSITS AND DEBENTURES OF INR OF 50 CRORES OR MORE.

•     

•    SMALL SHAREHOLDERS DIRECTORS

1.       A SHAREHOLDER HOLDING ANY NUMBER OF SHARES UP TO 20,000 WILL BE ABLE TO PARTICIPATE IN THE ELECTION OF DIRECTORS FROM THE SMALL SHAREHOLDERS.

2.       SMALL SHAREHOLDERS MAY HAVE A DIRECTORS FOR PUBLIC LIMITED COMPANY HAVING A PAID UP CAPITAL OF RS 5 CRORES OR MORE AND 1000 OR MORE SMALL SHAREHOLDERS MAY HAVE A SUCH DIRECTOR

•    RULES  7

1.       MAY APPOINT SUO MOTTO

2.       ON THE APPLICATION OF AT LEAST 1/10 OF SMALL SHAREHOLDERS

3.       NOTICE BEFORE 14 DAYS

4.       MUST BE SIGNED BY 100 SMALL SHAREHOLDERS

5.       THROUGH POSTAL BALLOT IN CASE OF LISTED COMPANY

6.       MAXIMUM THREE YEARS

•    WOMEN DIRECTORS(A RULE 3 OF COMPANIES
( APPOINTMENT AND QUALIFICATION OF DIRECTORS) RULES 2014 )

•    WOMEN DIRECTOR:-A COMPANY WHETHER IT WOULD BE PRIVATE COMPANY OR PUBLIC COMPANY WOULD BE REQUIRED TO APPOINT ONE MINIMUM DIRECTOR IN CASE IT SATISFY THE FOLLOWING CRITERIA:

1.       THE COMPANY IS LISTED COMPANY AND SECURITIES ARE LISTED ON THE STOCK EXCHANGE

2.       THE PAID UP CAPITAL OF SUCH COMPANY’S INR 100 CRORES OR MORE WITH A TURNOVER OF INR 300 OR MORE

•    ADDITIONAL DIRECTOR: (161(1)) OF THE COMPANIES ACT, THE ARTICLES  OF COMPANY MAY CONFER ON ITS BOD THE POWER TO APPOINT ANY PERSONS OTHER THAN A PERSON WHO FAILS TO GET APPOINTMENT AS DIRECTOR IN A GENERAL MEETING AS ADDITIONAL DIRECTOR AT ANY TIME WHO SHALL HOLD THE OFFICE UP TO DATE OF THE NEXT AGM OR THE LAST DATE ON WHICH THE AGM SHOULD HAVE BEEN HELD WHICH EVER IS EARLIER.

•    ALTERNATE DIRECTORS:-ACCORDING TO SEC 161(2) OF THE COMPANIES ACT, THE BOD MAY IF AUTHORISED BY ITS ARTICLES OR BY A RESOLUTION PASSED GM, NOT BEING ALTERNATE DIRECTORSHIP FOR ANY OTHER DIRECTOR OR HOLDING DIRECTORSHIP IN THE SAME COMPANY TO ACT AS AN ALTERNATE DIRECTOR FOR A PERIOD DURING HIS ABSENCE FOR A PERIOD OF NOT LESS THAN THREE MONTH FROM INDIA.

•    NOMINEE DIRECTOR:-AS PER SECTION 161(3) OF  THE COMPANIES ACT,SUBJECT TO THE ARTICLES BY THE BOD MAY APPOINT ANY PERSON AS DIRECTOR NOMINATED BY ANY INSTITUTION IN PURSUANCE OF ANY LAW FOR THE TIME BEING IN FORCE OR OF AGREEMENT OR BY THE CG/SG BY VIRTUE OF ITS SHAREHOLDING IN A GOVT COMPANY

•    DIRECTORS APPOINTED IN CASUAL VACANCY: 161(4): IF THE OFFICE OF ANY DIRECTOR APPOINTED BY COMPANY IN GENERAL MEETING IS VACATED BEFORE THE TERM OF THE OFFICE, THE RESULTING CASUAL VACANCY MAY BE FILLED SUBJECT TO AOA AT A MEETING OF THE BOARD MEETING WHICH SHALL BE SUBSEQUENTLY APPROVED BY THE MEMBERS IN THE NEXT GENERAL MEETING.