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Executive v/s Non-Executive

Kushal (Student) (225 Points)

16 December 2008

What is the difference between an Executive and
Non-Executive Director ?

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4 Replies

AMIT ADHIA (ca) (110 Points)
Replied 16 December 2008

executive director is managing director and non executive director is whole time director.

CA Somnath (Ca + Article Assistent) (32 Points)
Replied 16 December 2008

A director who is engaged in the company whole time is treted as executive director. and if he is not engaged whole time but participating in the board meeting and other commitee meeting for decision meking, then he is treted as non-executive director. All promoters may or may not be the executive director but they all are dependent director (not an independent director).

CS Arpita Rajpurohit (Company Secretary) (1111 Points)
Replied 18 December 2008

Executive directors are those who particiapate in day to day working of the compny. whereas non-executive directors doot participate in every day business. they just participate in board n commitee meetings for taking decisions.

Karthik Rajan (Auditor) (26 Points)
Replied 25 December 2008

Dear Kushal,

The answer is very simple.

1) Executive director is a whole-time employee of the company as well as a director in the same company. Hence, he serves the company in 2 capacities - (a) As an employee of the company. (b) As a member of the board of directors. Example: Managing Director or CEO or by what ever name so called. Non-executive director is only a director of a company and does not serve the company in the capacity of an employee.

2) Executive director is not an independent director where as non-executive director may or may not be independent director.

3) Executive director is paid the salary and non-executive director is paid director's fees.

4) S/287 and S/300, Companies Act, 1956 - Executive director is not considered for the purpose of the quorum and cannot vote in meetings. However, the fact: (a) whether the non-executive director can be counted as part of the quorum and (b) whether the non-executive director can vote in the board meetings depends upon whether he is independent or not as per point (2) above.

5) Similar restrictions as per point (4) above are placed by the virtue of Clause 49 of the listing agreement applicable to the listed companies.

The list is never-ending. Since I am employed in Kuwait and (a) qualified my CA during 2003 and (b) never in touch with Indian Companies Act, 1956, I am unable to dwelve on additional details. Sorry for the same.

Best of luck for CA-career.

With warmth and blessings,

CA.Karthik.R