Directer

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Querist : Anonymous

Querist : Anonymous (Querist)

25 November 2010 Who is an Executive and Non-executive director? Which Act defines these terms? Also Part time Director et cetera?
Yesterday many top notch Bankers were arrested by CBI. Among them their is a Chartered Accountant who is a director of Central Bank of India.
On television the Chairman of Central Bank of India, S Sridhar was telling that the arrested director is a Part-time Non-executive Director under Chartered Accountant category and he was not an official of the bank. Also he stated that he did not have access to the books of accounts of the bank. i got confused after hearing this.
Can somebody clarify this ?

udit sharma

udit sharma (Expert)
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25 November 2010 Hi...

The terms 'Executive' and Non-Executive' Director are not defined in the Companies Act, 1956 but Listing Agreement deals with these terms under Clause 49(I) regarding the Composition of Board of Directors of a Listed Company. As per the said Clause, Every Company must have an optimum combination of Executive and Non -Executive Directors with not less than 50% of the total number of Directors to be Non - Executive Directors.

These terms have not been defined anywhere but for your understanding:

1. Generally, Directors who have some executive powers in relation to the Management of the Company are referred to as the Executive Directors. Normally. Managing Director and Whole time Directors come within the ambit of the term 'Executive Director'. The term 'Managing Diretor' has been defined under section 2(26) of the Companies Act, 1956 and Whole Time Director means a Director who is in whole time employment of the Company i.e. devotes his entire time and energy to the Company.

On the other hand, Directors who do not have any executive powers in relation to the managment of the Company and are neither Managing Director nor in the whole time emplyment of the Company are treated as Non - Executive Directors. These are also referred to as part time directors since they are not in the whole time emplyment of the Company and simply attend the Board / Committee meetings and provide their independent comments.

Hence, a Non - Exceutive Director is also referred to as "Part-Time Directors".

Moreover as per section 209A of the Companies Act, 1956 Directors are not empowered to inspect the Books of Accounts and the same are available for inspection to Regsitrar, Persons authorised by the Central Government and SEBI only.

I hope i am able to clarify you on the topic.....

This explanation is only as per my understanding of the subject and views of eminent experts are welcome:-)

God Bless

Udit Sharma

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