Identify the Types of Directors in a Company in India
A company has a board consisting of directors who are in charge of managing the business. In other words, they are responsible for planning strategy, making decisions, and ensuring that the company reaches its goals. There are different types of directors in a company, and even though they are given their individual powers, all of them act together as a board for the betterment of the firm. Additionally, it is the board of directors that represents a Company.
You can identify a director by the role he plays in the company and the power he holds:
Executive Director
He or she is at the top of the power pyramid, holding the most influence, and with great power comes great responsibility. The executive director works full time and is solely responsible for the accomplishment of business goals. Consequently, for every decision, the company and its employees look up to him, and he is supposed to be extra careful with every step he takes.
Non-executive Director
Non-executive Directors are non-working directors, and they are not responsible for the everyday tasks of the firm. That is to say, they are merely to assist the executive director in planning out a strategy or making policies.
Managing Directors
They have a considerable amount of decision making power and manage the members and operation of the company. For a company having a share capital of five crore rupees, it is mandatory to have a managing director.
Independent Directors
As the name suggests, independent directors are not directly related to the company. They are only at the board because of their expertise and experience of business affairs so that they can help the company with their expert advice. For a company having a turnover of 100 Crore Rupees, it is necessary to have at least two independent directors.
Residential Directors
As per Indian business norms, an Indian company must have at least one Residential director. A director who has been a resident of India for at least 182 days immediately before the registration is termed as a residential director.
Small Shareholder Directors
Small Shareholder Directors have the power to appoint a director in a listed company. He can do this if he can get approvals of 1000 shareholders or 1/10th of shareholders.
Women Directors
It is mandatory for a company with its securities listed on the stock exchange to have a women director. Furthermore, a firm will need a woman director if it has a turnover of 300 Crores or a paid-up capital worth a hundred Crores.
Additional Directors
Anyone can take up the position of an additional director until the next Annual General Meeting of the Board.
Alternate Directors
If a director is not able to perform his duties due to any circumstances and is absent from the board for three months or more, an alternate director is liable to join the board on his behalf. For instance, he temporarily acts as a director and is only permitted to use the director’s powers he filled the position for.
Nominee Director
In case of severe mismanagement when board members start to misuse the power trusted to them, shareholders, third parties, or the central government can appoint a nominee director. He works to bring the company’s management back in place.
This board consists of the types of directors mentioned above, who are responsible for the success of a company. The power of management is divided among them to maintain a fair system.
Need Help in Assigning Directors of the Company?
If you do not have any prior experience of managing a business, it is not that simple to completely understand the importance of the distribution of powers among the directors. For this, it is advised to take help from those who do. Reach out to professionals for assistance for business registration. They have resources and the experience which you require to uplift your business. They will provide you with answers to all your queries regarding how to manage your business.
3E Accounting India
3E Accounting India is a corporate service provider and accounting firm assisting clients with company formation and incorporation. We offer company secretary and business-related services in India.
