Company Formation & Administration

Types of Directors

First Directors : The number of directors and the names of the first directors shall be determined in writing by the subscribers of the Memorandum or a majority of them. However, where no provision is made in the Articles of a company for the appointment of first directors, the subscribers to the Memorandum, who are individuals, shall be deemed to be the first directors of the company until the directors are duly appointed, in accordance with provisions of the Companies Act, 2013.

Executive and Non-executive Directors : Directors who are in full-time employment or are entrusted with the day-to-day operations of the companyare termed as executive directors. Non-executive directors are from outside the company. They do not take part in the every-day activities of the company.

Resident Director : As per the Companies Act, 2013, at least one of the directors of a company must be a person who has stayed in India for a total period of not less than 182 days during the financial year. In the case of a newly incorporated company, the requirement shall apply proportionately at the end of the financial year in which it is incorporated.

Independent Directors : As per the Companies Act, 2013, the appointment of an independent director is mandatory to certain classes of companies. Every listed public company shall have at least one-third of the total number of directors as independent directors. However, private limited companies need not appoint an independent director.

Woman Director : The Companies Act, 2013, requires certain classes of companies to appoint at least one woman director on the Board of the company. This is not mandatory for private limited companies.

Director Elected by Small Shareholders : Under the Companies Act, 2013, only listed companies may appoint a small shareholders’ director. Shareholders holding shares of nominal value of not more than INR 20,000 or such other prescribed sum may appoint one director from amongst them.

Additional Director : The Board may appoint an additional director at any time if the Articles confer such powers.

  • A person who fails to get appointed in a general meeting cannot be appointed as an additional director.
  • An additional director shall hold office up to the date of the next Annual General Meeting (AGM) or the last date on which the AGM should have been held, whichever is earlier.

Alternate Director : The Board may appoint an alternate director at any time if the Articles confer such powers.

  • The person to be appointed as an alternate director shall not hold another alternate directorship in any other company;
  • An alternate director can only be appointed in case a director leaves India for a period of at least three months;
  • An alternate director to an independent director should also satisfy the criteria for an independent director;
  • The office of the alternate director shall be vacated if and when the director in whose place he has been appointed returns to India;
  • Provisions of automatic re-appointment of the retiring director shall apply to the original director and not to the alternate director.

Nominee Directors : Subject to the Articles, the Board may appoint any person as a director nominated by an institution as a nominee director, in pursuance of any law or agreement or by the Central or State Government, by virtue of its shareholding in a government company.

Permanent Directors : The Articles may also provide for the appointment of permanent directors. Such directors continue to be lifetime directors subject to other provisions of the Companies Act, 2013.

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Rajiv Rajendran
Executive Director
Corporate Services

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