According to section 2(34) of Companies Act,2013, a Director is a person appointed to the Board of the company who manages the affairs of the company. With regard to the legal position of the directors in relation to the company, a director can be considered as both agent and trustee of the company.
There are two types of Directors-
- Executive Director
- Non Executive Director
Executive Directors are the directors who manage the different business operations carried by the company. Whereas, Non Executive Directors participate through board meetings in framing the policies for efficient management of the Company.
Who can be appointed as the director of the company?
As per section 149(1) of Companies Act,2013, only an individual can be appointed as the director of the company. Thus, a body corporate or AOP cannot be appointed as the director of the company.
Further, as per section 152(3) of Companies Act,2013, only an individual to whom the DIN is allotted can be appointed as the director of the company.
What is the number of directors a company can appoint?
Minimum number of Directors- Every company shall have
- In case of Public Company-3 Directors
- In case of Private Company-2 Directors
- In case of One Person Company-1 Director
Maximum number of Directors- The maximum number of directors that a company can appoint is 15 directors. However, a company can have more than 15 directors, provided it has passed a special resolution.
A Government Company and Section 8 Company are exempted from the application of Section 149(1)(b) of Companies Act,2013, which requires the company to have a maximum of 15 directors only and also from the application of first proviso to section 149(1) which enables the company to appoint more than 15 directors after passing a special resolution, provided such companies have not defaulted in filing the financial statements under section 137 or Annual return under section 92 with the registrar.
How to appoint Directors?
Usually Articles of the company contain names of First Directors. When no such provision is made, the subscribers to the memorandum who are individuals shall be deemed to be the first directors. The directors so appointed shall hold the office until the directors are duly appointed.
The term of First Directors is limited to the First Annual General Meeting.
Unless the Articles of the company provide otherwise, the subsequent directors are appointed by the company in the general meeting.
Requirements to Appoint Directors
- A person shall be appointed as the Director only when he has been allotted DIN under section 154 of Companies Act,2013 or any other number as may be prescribed under section 153 of Companies Act,2013.
- Every person proposed to be appointed as the director by the company in a general meeting or otherwise shall furnish his DIN or any other number as may be prescribed under section 153 of Companies Act,2013.
- As per section 152(4) of Companies Act,2013, a person proposed to be appointed as the director shall furnish a declaration that he is not disqualified to become a director under the Act.
- A person shall not be appointed as a director unless he has given his written consent to hold the office as the director in Form DIR-2
- As per Section 152(5) of Companies Act,2013, the Company shall file the consent of the director with the Registrar within 30 days of appointment in Form DIR-12 along with the prescribed fee as may be prescribed.
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