{"id":41895,"date":"2022-04-06T11:15:53","date_gmt":"2022-04-06T05:45:53","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=41895"},"modified":"2022-04-06T11:34:11","modified_gmt":"2022-04-06T06:04:11","slug":"directors-under-companies-act-2013","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/directors-under-companies-act-2013\/","title":{"rendered":"Directors under Companies Act, 2013"},"content":{"rendered":"\n<p class=\"has-drop-cap\">A company is a legal entity, it has no physical existence, and it can act through a natural person only. The Company hires professionals to direct its affairs, and they are called directors, so the directors are the persons who act on behalf of the Company. The Company deals with the appointment, removal, qualification and <a href=\"https:\/\/corpbiz.io\/learning\/disqualification-of-directors\/\"><strong>disqualification of directors<\/strong><\/a>.&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/directors-under-companies-act-2013\/#Introduction\" >Introduction&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/directors-under-companies-act-2013\/#Responsibilities_of_Directors\" >Responsibilities of Directors&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/directors-under-companies-act-2013\/#Classification_of_Directors\" >Classification of Directors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/directors-under-companies-act-2013\/#Qualification_and_disqualification_of_Directors\" >Qualification and disqualification of\nDirectors&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/directors-under-companies-act-2013\/#Conclusion\" >Conclusion&nbsp;&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><strong>Introduction&nbsp;&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Directors are defined under section 2(34) of the Companies Act, 2013 as \u201ca director appointed to the board of a company\u201d. A director is a natural person appointed by Company to give directions to Company in which he is appointed. Such directors are also called officers of the Company.&nbsp;<\/p>\n\n\n\n<p>They\nshare the responsibility of achieving all the goals mentioned in the MOA of the\nCompany. Directors are involved in the management of tasks and execution,\nsupervision and control of such tasks. The main aim of directors is to achieve\nthe ultimate aim or objective of the Company, and qualification and\ndisqualification of directors and even their appointment and removal are taken\ncare of by the same Company.<\/p>\n\n\n\n<p>The\npublic Company should have a minimum of three directors while a private company\nshould have at least a minimum of two directors, and for One Person Company,\nonly one Director is required.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Responsibilities_of_Directors\"><\/span><strong>Responsibilities of Directors&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Primarily,\nthe board of Director is responsible and accountable for the followings:<\/p>\n\n\n\n<ul><li>Appointment of the senior management<\/li><li>Deciding the Company\u2019s strategies and objectives and also shaping them.&nbsp;<\/li><li>Guiding the Company towards achieving its aim of it.<\/li><li>The Company\u2019s accounts and finances, etc.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Classification_of_Directors\"><\/span><strong>Classification of Directors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nfollowings are the types of directors who are part of a company:<\/p>\n\n\n\n<ul><li><strong>Ordinary\nDirector<\/strong><\/li><\/ul>\n\n\n\n<p>Such\nDirector is also known as a Simple Director. They attend every board meeting\nand participate in the matters put before in the same. They are neither whole\ntime directors nor the managing Director.&nbsp;<\/p>\n\n\n\n<ul><li><strong>Residential Director<\/strong><\/li><\/ul>\n\n\n\n<p>According\nto section 149(3) of the Act, there should be at least one person as Director\nin the Company who has stayed in India for not less than 182 days in the\nprevious calendar year.&nbsp;<\/p>\n\n\n\n<ul><li><strong>Managing Director<\/strong><\/li><\/ul>\n\n\n\n<p>Section 2(54) of the Companies Act, 2013 defines the Managing Director as a directors who, by virtue of the Company\u2019s AOA, agreement with the Company, board of Director or resolution passes in general meeting has substantial power of managing affairs of the Company.<\/p>\n\n\n\n<ul><li><strong>Whole-time Director<\/strong><\/li><\/ul>\n\n\n\n<p>A\nwhole-time director is the Director who is in whole-time employment of the\nCompany.<\/p>\n\n\n\n<ul><li><strong>Alternate Director<\/strong><\/li><\/ul>\n\n\n\n<p>Section 161(2) of the Act, the alternate Director is appointed by the Company if a director is absent for more than three months in India. The board of directors appoints such a director when a resolution is passed in a general meeting or authorised in the AOA of the Company. Such an alternate Director cannot hold the office for a term more than the Director in whose place he has been appointed, and he should vacate the office the moment the original Director comes back.<\/p>\n\n\n\n<ul><li><strong>Additional Director<\/strong><\/li><\/ul>\n\n\n\n<p>Section\n161(1) of the Act says that any person can be appointed as an Additional\nDirector by the Company.<\/p>\n\n\n\n<ul><li><strong>Professional Director<\/strong><\/li><\/ul>\n\n\n\n<p>A\ndirector who has a professional qualification and he has no pecuniary interest\nin the Company.&nbsp;<\/p>\n\n\n\n<ul><li><strong>Independent Director<\/strong><\/li><\/ul>\n\n\n\n<p>Section 149(6) of the Companies Act, 2013 defines an independent Directors as a director other than managing, whole-time or nominee director who is a person with integrity and possesses relevant experience; or who is not related to promoters of a company or its holding, associate or subsidiary companies or who has no pecuniary interest in the company or its holding, associate or subsidiary companies; or who possesses a relevant qualification as required.<\/p>\n\n\n\n<ul><li><strong>Interested Director<\/strong><\/li><\/ul>\n\n\n\n<p>A\ndirector who or his relatives, family, firm, body corporate or another\nassociation is interested in a contract or arrangement entered into or on\nbehalf of the Company as stated under section 2(49) of the Act.<\/p>\n\n\n\n<ul><li><strong>Nominee Director<\/strong><\/li><\/ul>\n\n\n\n<p>Those\nwho are nominated by the Company for grant of loans by the financial\ninstitutions, banks or government are called Nominee directors.<\/p>\n\n\n\n<ul><li><strong>Woman Director<\/strong><\/li><\/ul>\n\n\n\n<p>According\nto section 149(1)(a), there should be at least one female Director in listed\ncompanies or certain public companies.<\/p>\n\n\n\n<ul><li><strong>Small shareholder Director<\/strong><\/li><\/ul>\n\n\n\n<p>As\nper section 151 of the Act, the small shareholder has the right to elect at\nleast one person as a director.&nbsp;<\/p>\n\n\n\n<p>The\nqualification and disqualification of directors depend on these above-mentioned\ntypes of directors.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Qualification_and_disqualification_of_Directors\"><\/span><strong>Qualification and disqualification of\nDirectors&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <strong>Companies Act, 2103<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Companies_Act_2013\"><strong>[1]<\/strong><\/a><\/sup> has given provisions regarding the eligibility of a director under section 164, but the qualifications required to be a director are not given under the Act. But the companies mention the qualification of directors in their AOA. The qualification and disqualification of directors can also be taken out from other provisions of the Act.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Qualifications of directors&nbsp;<\/strong><\/h3>\n\n\n\n<p>According\nto all the provisions related to Director, the following can be called\nqualifications of a director:<\/p>\n\n\n\n<ul><li>An Indian national<\/li><li>Must have completed the age of 18 years<\/li><li>The Director must be an individual.<\/li><li>A person of sound mind<\/li><li>Must be competent enough to enter into a contract<\/li><li>If provided in AOA, then must hold share qualification.<\/li><li>Must not be the insolvent person<\/li><li>Must not be convicted for any of the offences by a Court<\/li><li>The person should have his DSC (Digital Signature Certificate)<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Disqualification of directors<\/strong><\/h3>\n\n\n\n<p>According\nto Section 164 of the 2013 Act, the following can be reasons for\ndisqualification of directors:<\/p>\n\n\n\n<ul><li>Unsound person and declared so by a competent court.<\/li><li>Undischarged insolvent<\/li><li>Convicted by a court for any offence<\/li><li>An order passed for his disqualification as Director.<\/li><li>Has not to pain for calls in respect of shares of Company<\/li><li>Has failed to file annual returns or financial statements for continuous three financial years<\/li><li>Has failed to repay the deposit or interest, or failed to redeem the      debentures on the due date or pay a dividend for one year.&nbsp;<\/li><\/ul>\n\n\n\n<p>Other\ndisqualification:<\/p>\n\n\n\n<ul><li>He has not got DIN<\/li><li>Convicted for an offence dealing with the related party transaction in last preceding five years.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion&nbsp;&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> The directors are an integral part of any company. There are certain responsibilities in the Company which only a director can perform. The Act dealing with matters related to directors is The Companies Act, 2013. Shareholders of the Company appoint these directors, and the qualification and disqualification of directors are mentioned in the AOA of the Company. A strict bar of five years is given to allow a person of appropriate qualification to represent the Company. However, a provision of appeal is also given in the Company Law along with thirty days remedial period to rectify any filing error.&nbsp; <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/audit-under-companies-act-2013\/\">Audit under Companies Act, 2013: Explained<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A company is a legal entity, it has no physical existence, and it can act through a natural person only. The Company hires professionals to direct its affairs, and they are called directors, so the directors are the persons who act on behalf of the Company. The Company deals with the appointment, removal, qualification and [&hellip;]<\/p>\n","protected":false},"author":36,"featured_media":41896,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120],"tags":[2237],"acf":{"service_id":"321"},"authorName":"Shambhavi Suyesha","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/03\/IMG-20220324-WA0005.jpg","authorDescription":"Shambhavi holds a strong legal background, having completed her BA LLB and LLM. She is particularly interested in legal research and writing, and wishes to utilise her knowledge to create informative legal content. She is an analytical researcher and keeps herself updated about the current legal affairs. She also holds prior experience in publishing articles on assorted legal areas.","postViews":29587,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/41895"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=41895"}],"version-history":[{"count":15,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/41895\/revisions"}],"predecessor-version":[{"id":41918,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/41895\/revisions\/41918"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/41896"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=41895"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=41895"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=41895"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}