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Directors On Incorporation,a company becomes a person in the eyes of law. However, it does not have any physical appearance. In order to achieve the objects that are stated in the Memorandum of Association, the company has to depend up on agency called "Board Of Directors"

The Members of Board of Directors of a company are called its Directors.

The Companies Act 2013 does not contain an exhaustive definition of the term "director" Sec 2(34) prescribed that "director" means a director appointed to the Board of a Company. Sec 2(10) defined that "Board Of Directors" or "Board", in relation to a company, means a collective body of the directors of the company.

Number of Directors:

Public Company: Minimum 3 Directors
Private Company: Minimum 2 Directors
One Person Company: Minimum 1 Director

In any company the maximum number of Directors is 15.

However the number can be further increased by passing a special resolution.

Number of Directorships: The maximum number of directorships a person can hold is 20.

Further, in that 20 companies the person cannot be a directors for morethan 10 public companies/private companies that are either holding or subsidiary of a public company.

Types of Directors: Woman Director, Independent Director, Small Shareholders Director, Additional Director, Alternate Director, Nominee Director.

Woman Director (Sec 149(2))

As per Rule 3 of Companies(Appointment & Qualification of Directors) Rules 2014

The following companies are required to appoint atleast one director on their Board. (I) Every Listed Company (ii) Every other Public Company having:-

(a) paid up share capital of 100 Crore rupees or more; or

(b) Turnover of 300 Crore rupees or more. Independent Directors (Sec 149(4))

An independent director means a fire to other than a Managing Director or Whole Time Director or a Nominee Director. An Independent Director can be selected from a data bank containing names,addresses and qualification of persons who are eligible and willing to act as Independent Director. 

Number of Independent Directors:

Every Listed Company shall have 1/3rd of the Total Directors as Independent Directors.

As per Rule 4 of Companies(Appointment and Qualification of Directors) rules 2014, the following class of the companies are required to have atleast 2 directors as Independent Directors

- Every public company having paid up share capital of 10 Crore Rupees or more Or

- Turnover of 100 Crore rupees or more Or -aggregate outstanding loans, deposits & debentures exceeding 50 Crore rupees.

Term of Office: Director shall hold the office for a term up to 5 consecutive years. He shall not hold the office for morethan 2 consecutive terms. He shall be eligible for reappointment on passing a Special Resolution.

Small Shareholders Director (Sec 151)

Every Listed Company may have one director elected by small shareholders "small shareholders" means a shareholder holding shares of nominal value of not more than Rs.20,000/- or such sum as may be prescribed

Appointment: A listed company may by notice to not lessthan 1000 or 1/10th(one-tenth) of total small shareholders which ever is lower shall have a Small Shareholders director appointed by them. Or A listed company may suo moto opt to appoint a director representing small shareholders.

Term of office: The term of office of small shareholders shall not be morethan a period of 3 consecutive years and he shall not be liable to retire by rotation.

Additional Director (Sec 161(1))

If Articles of Association provide for, the Board of Directors can appoint a person as an Additional Director.

Term of Office: The additional director shall hold the office only up to the date of the next AGM or the last date on which the AGM should have been held, whichever is earlier.

Alternate Director (Sec 161(2))

If Articles of Association authorise the Board of Directors or by a resolution passed in a General Meeting a person can be appointed as an Alternate Director. The person in whose place the Alternate director is being appointed should be absent for a period of atleast 3 years from India. The proposed Alternate Director shall satisfy the criteria of Independent Director and he shall not hold the office of a Alternate Director in any Company.

Term of office: The alternate director shall hold the remaining period office of the original director in whose place he is appointed.

He shall vacate the office when the director in whose place he is appointed returns back to India Nominee Director (Sec 161(3)) The Board will appoint a Nominee Director subject to the Articles of Association of a Company. As the it appears from the name, Nominee Director is a Director who is nominated by any institution in pursuance of the provision of any law for the time being force or by any Central/State Government by virtue of its shareholding in a Government Company.

This is my humble effort to attempt this article. Any corrections/suggestions/value additions are welcome.



Published by

CA Arun Kumar
(CA in Service )
Category Corporate Law   Report

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