Types Of Directors And Their Duties

Directors, Types Of Directors And Their Duties


Duties of Directors:

Since the directors are the nucleus of the company, Companies act mentions duties of the directors. Following are some important duties mentioned:

  1. To Act in good faith in order to promote the objects of the company for the benefit of its members as a whole.
  2. To Act in best interest of company as a whole, its members, its employees, shareholders, community and protection of environment.
  3. To Act Accordance with the Articles of the company
  4. To excise his duties with due and reasonable care, skill and diligence.
  5. Not to do any act this gives any undue advantage or gain to the director or any of its relatives.

Type Of Directors Based on Residence:

  1. Resident Director:
    Any director who was in India for a period of 182 Days or more in the previous calendar year is a resident director.
  1. Non Resident Director:
    Any director who was not in India for a period 182 days in the previous calendar year is a non-resident director.

Type Of Directors Based on Appointment:

  1. Independent Director:
    Independent Director is a director who is not a whole time director or an nominee director or a managing director. Independent Directors are generally who are bough into the board for their relevant expertise and were not promoters of the company or its holding, subsidiary or associate company.
  2. Alternate Director:
    An alternate director is a director appointed to act on behalf of the “original director” during his/her absence for a period of not less than three months. No alternate director can be appointed to act on behalf of an independent Director.
  1. Nominee Director:
    Nominee director is a director appointed by any sectoral institution or government or any third person to represent its interests in the company.
  1. Small Shareholder Director:
    Small Shareholders Director is a director appointed by any listed company by small shareholders.
    1/10 shareholders or 1000 shareholders whichever is less are called small shareholders.
  2. Shadow Director:
    Shadow directorship in a concept and there is real appointment as a shadow director. Any person if on whose direction generally the board makes its decision is called as a shadow director. A shadow director need not have to be appointed and can be held responsible of the board’s decision even without having been appointed to the board.
  3. Additional Director:
    Any director who is appoint by the board of directors and not the shareholders are called as the additional directors.

Type Of Directors Based on powers

  1. Executive Director:
    Any director having executive powers is called an executive director.
  2. Non Executive Director:
    A director who doesn’t have any execution powers are called a Non Executive director.

Companies Act 2013 also introduced the concept of Woman Director prescribing classes of companies to have at-least one woman director on their board of directors.