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Types of Board of Directors As Per The Companies Act 2013

The different terms being associated with the post of director in a company can be confusing. This article is dedicated to solve this confusion and differentiate between the types of Board of Directors as mentioned in the Companies Act 2013.

Additionally, we will also discuss the roles and responsibilities of types of directors. Let us begin with the fundamental question of what do you mean by a Director?

What is the Meaning of Director in a Company?

A company is an artificial person in the eyes of the law. It is a separate existence legal and entity. However, as it is not a natural person it requires the help of natural persons to run its day to day operations. This body is known as the Board of Directors.

The members of this governing body are known as Directors. They are divided into different categories based on their functions and responsibilities.

What is the Minimum Number of Directors in a Company?

As per the Companies Act 2013, the minimum number of directors in a company is as follows.

• Private Limited Company – Two Directors
• One Person Company – One Director
• Public Limited Company – Three Directors

The maximum number of directors that can be appointed in a company is 15. However, this number can be increased by passing a special resolution.

Types of Board of Directors as mentioned in the Companies Act 2013

Residential Director:

According to regulations mention in Section 149(3) of Companies Act, 2013, it is mandatory to appoint a director who has stayed in India for not less than 182 days in the last calendar year.

Small Shareholders Director:

This type director exists only in listed company listed company on the notice served by 1000 shareholders or 10 % of shareholders (whichever is less) need to appoint a director from these shareholders.

Women Director:

As per Section 149 (1) (a) f the Companies Act 2013 every listed company or a company having the following characteristics need to appoint a women director;

a) The Paid-up capital is more than INR 100 crore or,

b) The turnover is Rs 300 crores or more

Additional Director

A proposed director will be appointed as an additional director until the next Annual General Meeting takes place. This provision is mention under section 161(1) of the Companies Act 2013.

If the AGM does not take place, then such term would end on the date AGM was supposed to be held.

Alternate Directors

Alternate directors are appointed if the director is absent from the country for more than 3 months. This appointment procedure is mentioned under section 161(2) of the Companies Act 2013.

Shadow Director

Any person who is not a part of the board of directors but has some power to run the business operations can be appointed as a shadow director.

Nominee Directors

A nominee director is appointed in case of mismanagement or oppressive conducts from the board of directors.

These directors are appointed by either special class of shareholders or financial institutions, third-party by contracts or by the government.

Independent Director

The following conditions make it mandatory to appoint independent directors in case of a public company as per the rule 3 of the Companies Rules 2014

1. Paid-up Capital of INR 10 Crores or more,
2. Turnover of INR 100 Crores or more,
3. Total outstanding loans, deposits, and debenture of INR 50 Crores or more.

Conclusion

The directors perform several functions for the company. The types of the board of directors execute different tasks.

These functions include the appointment of the upper level of managers, determination of the company’s objective, the formation of policies, correspondence with shareholders, etc.

One can read more about the composition of board of directors as per the Companies Act by clicking here

Also Read: Types of Committee as per the Companies Act, 2013