Definition of different types of Directors

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Querist : Anonymous

Querist : Anonymous (Querist)

17 May 2010 What is the difference between a Director, Managing Director, Whole time director, Executive director and a Non-executive director?

What will be the normal roles and powers of any type of director?

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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17 May 2010 "director" includes any person occupying the position of director, by whatever name called

"managing director" means a director who, by virtue of an agreement with the company or of a resolution passed by the company in general meeting or by its Board of directors or, by virtue of its memorandum or articles of association, is entrusted with 2[substantial powers of management] which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called:

Term 'Whole time Director is only explained in para explanation in Section 269 of the Companies ACt, 1956.

Thus it means Director who is in employment or who devotes his whole time in the management of the Company business unlike non executive director who may renders expert services to the Company.

Executive directors perform operational and strategic business functions such as:
managing people, looking after assets
hiring and firing, entering into contracts
Executive directors are usually employed by the company and paid a salary.

Non-executive directors use their experience and expertise to provide independent advice and objectivity, and they usually have a role in monitoring executive management. A non-executive director might be appointed to carry out a specialist role on a part-time basis or for their expertise in specific activities, such as strategy and contract negotiation.

They may be regarded as employed by the business or self-employed under a contract for services, depending on the terms and conditions of engagement. They usually work part time, attending board meetings and spending time on specific projects.

Non-executive directors bring an objective view of the business, can improve the board's effectiveness at relatively low cost and provide valuable business connections.

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