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All you need to know about Director's and its Types

August 2, 2021 by Team Instabizfilings

Blog Details

Directors of the company are the individuals that are elected as, or elected to act as, representative of the stockholders to establish corporate management related policies and to make decisions on major company issues. The success of the company depends upon the competence and integrity of its directors. According to section 2(10) of Companies Act, 2013, the Board of Directors or Board in relation to a company, means collective body of directors of the company. As per section 149 of the Companies Act, 2013, the Board of Directors of every company shall consist of individual only, thus no body corporate, association or firms shall be appointed as director.


A director of the board may be appointed as:

1. First Director

2. Resident Director

3. Women Director

4. Independent Director

5. Alternate Director

6. Additional Director

7. Small Shareholder Director

8.  Nominee Director


First Director

> According to section 152 of the Companies Act, 2013, the subscribers to the memorandum of association who are individuals shall be the first directors of the company until the directors are duly appointed


Resident Director

> As per section 149(3) of the Companies Act, 2013, every company shall have at least one director who is stayed in India for a period of not less than 182 days during the financial year;

> For newly incorporated company the above section is applicable proportionately at the end of the financial year in which it is incorporated.


Women Director

> According to 2nd proviso to section 149(1) read with Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014, following companies must have at least one Women Director:

1. Listed Companies

2. Public Companies whose paid up capital is rupees 100 crore or more

3. Public Companies whose turnover is rupees 300 crore or more


Independent Director

> It means a director other than managing director or a whole time director or a nominee director who does not have any material or pecuniary relationship with the company or directors

> Independent Director is an non-executive director

> As per section 149(4) of the Companies Act, 2013, read with Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014 following companies to have specified number of independent directors

1. For All Listed Companies [At least one-third of total number of directors]

2. For Public Companies whose paid up capital is rupees 10 crore or more or with turnover of rupees 100 crore or more or with outstanding loans, debentures and deposits of rupees 50 crore or more [Atleast 2 independent directors]

3. Joint Venture, Wholly Owned Subsidiary and a Dormant Company defined under section 455 of the act are not covered under this above rule

> Appointed for a period of 5 consecutive years and term shall not be more than 2 consecutive terms


Alternate Directors

> As per section 161(2) of Companies Act, 2013, the person who act in the absence of  original director during his absence for a period not less than 3 months from India

> It must be authorize by the article or by a ordinary resolution passed in the general meeting

> On the return of the original director, the alternate director shall vacate his office


Additional Director

> As per section 161(1) of the Companies Act, 2013, a person who fails to get appoint as a director in general meeting cannot be appointed as Additional Director

> It shall hold office up to the date of next AGM or the last date on which AGM should have been held whichever is earlier


Small Shareholder Director

> As per section 151 of the Companies Act, 2013, every listed company may have one director elected by small shareholders

> Small Shareholder means a shareholder holding shares of nominal value of not more than twenty thousand rupees or such other sum as may be prescribed

> It can be elected by Listed Company voluntarily or by small shareholders

> A person shall not hold the office of small shareholder’s director in more than two companies


1. Election of Small Shareholders

A Listed Company may upon notice of not less than - 

1. 1000 small shareholders, or;

2. One-tenth of the total number of shareholders, whichever is lower have a small shareholder director elected by the small shareholder


2. Notice of intention to propose a candidate

> It shall leave a signed notice of a candidate who is intending to be a director at least 14 days  before the meeting specifying their details and proposed director details


3. Tenure, Retirement and Association

> It shall hold office for a period not exceeding consecutive 3 years

> He is not liable to be retire by rotation

> He is not eligible for re-appointment after the expiry of his tenure

> He shall not appointed any other capacity with the company for a period of 3 years from the date of cessation as a small shareholder’s director


Nominee Director

> As per section 161(3) of Companies Act, 2013, the board may appoint any person as a director nominated by any institution or by the central government or the state government by virtue of its shareholding in Government Company

> A nominee director is an individual nominated by an institution, including banks and financial institutions, on the board of companies where such institutions have some ‘interest’

> The ‘interest’ can either be in form of financial assistance such as loans or investment into shares

> The main purpose of appointment of such persons is to safeguard the interest of the nominator, without conflicting with his/ her fiduciary duty as a director

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