Director of the company under the companies Act 2013

Author: Anupam Singh Sengar

College name: University of five year law college, Rajasthan university

Introduction:-

The very first thing that comes to our mind after hearing the word director is the main authority of any body. According to oxford dictionary ‘director’ means the person or authority that is in charge of any activity, department or organization. It relates to all activities, but this word is formally and mostly used in the co-operative sector. As world is rapidly rushing towards industrialization, innovation and development, big companies and enterprises are very common in this world. And conclusively the meaning of the word director has shrinked to this field only. It has become the fancy term of the managing authorities of these companies. Companies Act 2013 which defines and regulate all the activities relating to the company has significantly describe this term and has given it a legal definition.

Director:-

The term director is defined in the section 2 (34) of the Companies Act 2013 [1]as ‘means a director appointed to the Board of a company’. It is not very explicitly defined in the act that who is the director. It is basically the person in charge of the management functions of a company. He is the capable and the trusted person on whom the management and regulation of the company is entrusted by all the stakeholders of the company.

Board of directors:-

To understand director it’s important to under board of directors. It is defined in the Section 2 (10) of the Companies Act, 2013 [2]defines that “Board of Directors” refers to the collective body of the directors of the company. In the todays commercial world it is very unlikely to have only one director, that why there is a body of directors that are trusted by the stakeholders of the company for the betterment of the company and they are expected to manage the company in a way to aid it.

Number of directors:-

The section 149 (1) (a) of the companies Act 2013 [3]orders that there should be a compulsory board of directors comprising of individual directors. It further lists the minimum and maximum number of directors for different type of company.

(a) For public company it directs minimum number of 3 directors.

(b) For a private company it directs a minimum number of 2 directors

(c) For One Person Company it requires minimum of one person.

Sub clause (b) of the same section defines the maximum number of directors for every company to be 15.

Types of directors:-

Some of the different categories of directors defined in the company Act is as follows:-

1) Residential director – according to Section 149(3) of the Companies Act, 2013[4], each company shall have a director who has remained in India for 182 days or more.

2) Independent director – According to Section 149(6), [5]independent director is the one who is not a managing director or a whole-time director or a nominee director. He does not have any pecuniary relation with the company except salary. He or she acts as a mentor and provide enriched skills for controlling risks and increasing reputation of firm.

a) He should not be a promoter in present or in the past of the company and should not hold any, subsidiary or associate company

b) He should not be related to the promoters or directors of the company, its holding, subsidiary or associate company.

c) He should not have any pecuniary relation with the company, its holding, subsidiary or associate company, or their promoters, or director, other than remuneration.

3) Small Shareholders Directors – Section 151 of the companies Act 2013 [6]defines that the company have to appoint at least one director that is nominated by small shareholders of the company, in prescribed manner and terms and conditions.

4) Women Director – Section 149 (1) (a) [7]talks that there should be at least one women director in the board of directors of the company.

5) Additional Directors – As per Section 161(1) of the Companies Act, 2013 [8] the board of directors have the power to appoint a person as additional director other than who fails to get appointed as a director in a general meeting a company

6) Shadow Director – defined in section 2 of the Act [9] he is a person who is not a selected member of board but his directions and advices are followed by the boards of director.

. Appointment:-

Appointment of directors of a company is defines in the section 152 of the companies Act 2013[10].

1) It says that when there is no provision is established by the articles of a company for the enlisting of the first director then the subscribers to the memorandum should be considered as the first directors until the directors are fully appointed. In case of a One Person Company the individual member would be considered as the first director until the director or directors are appointed.

2) It further provides that all the directors of the company shall be elected or chosen in the general meeting of the company.

3) No person can be selected as a director unless he is given the director identification number under section 154 of the company Act 2013.

4) Every person who is proposed to be a director shall furnish his Director Identification Number and a declaration that he is not disqualified to be a director.

Conclusion:-

Thus the term director and provision related to them are dispersed in various sections of this act and are not enlisted together. It clearly shows that there is a board of director in very company and individual directors are its members. There are certain different categories of director which are enlisted in the act itself.

[1]Company Act 2013, §2(34) , Acts of India, 2013(India), website http://ebook.mca.gov.in/Default.aspx?page=main [2] Company Act 2013, §2(10) , Acts of India, 2013(India), website http://ebook.mca.gov.in/Default.aspx?page=main [3] Company Act 2013, §149 (1)(a) , Acts of India, 2013(India), website http://ebook.mca.gov.in/Default.aspx?page=main [4] Company Act 2013, §149(3) , Acts of India, 2013(India), website http://ebook.mca.gov.in/Default.aspx?page=main [5] Company Act 2013, §149(6) , Acts of India, 2013(India), website http://ebook.mca.gov.in/Default.aspx?page=main [6] Company Act 2013, §151 , Acts of India, 2013(India), website http://ebook.mca.gov.in/Default.aspx?page=main [7] Company Act 2013, §148(1)(a) , Acts of India, 2013(India), website http://ebook.mca.gov.in/Default.aspx?page=main [8] Company Act 2013, §161(1) , Acts of India, 2013(India), website http://ebook.mca.gov.in/Default.aspx?page=main [9] Company Act 2013, §2 , Acts of India, 2013(India), website http://ebook.mca.gov.in/Default.aspx?page=main [10] Company Act 2013, §152 , Acts of India, 2013(India), Website http://ebook.mca.gov.in/Default.aspx?page=main