December 30, 2022
Swathi v prabhu

Types of directors in a company

Directors of a company are individuals who are charged with governance in managing the affairs of the company as appointed by the trustees or shareholders. The company appoints more than one director to manage the affairs of the company, a team of directors collectively known as the board of directors. The boards of directors are charged with governance in managing the affairs of the company and safeguarding the rights of the stakeholders who are the owners of the company. Let us understand more about appointments and types of directors in a company.

Minimum and Maximum number of directors

As per the provisions of the companies act 2013, the minimum numbers of directors in the case of a private company are 2, 3 in the case of a public company, and 1 in the case of one-person companies. The maximum number of directors a company can have are 15, but this can be bypassed by passing a special resolution in the general meeting of the company.

Let us understand the different types of directors in a company

Types of directors

1. Residential director

As per the provisions of the companies act, 2013, every company needs to appoint a residential director who has stayed in India for 182 days or more and has fulfilled the specific conditions which make him an eligible resident of the country.

2. Independent director

An independent director is a special director of a company who does not have any material relationship with the company and is considered an outsider. They are not involved in the day-to-day affairs of the company and have an independent judgement to protect the interest of minority shareholders whose voices don’t get heard. They are non-executive directors with independent judgement.

Although the appointment of an independent director is left at the discretion of the company, some companies as per the companies act, 2013 mandatorily must appoint an independent director. The following companies include:-

1. Public companies having paid-up capital of 10 crores or more,

2. Public companies having annual turnover of 100 crores or more,

3. Public companies have outstanding loans, deposits, or debentures of 50 crores or more.

3. Women director

As per section 149(1)(b) of the companies act, 2013, it is obligatory for companies, both private and public to appoint a women director, in case it fulfils the followings obligations:-

1. The company is a listed company listed on any major securities exchanges,

2. The paid-up capital of the company is 100 crores or more with an annual turnover of 300 crores or more.

4. Alternate director

An alternate director is a temporary director appointed in place of a director who is not available in the country for 3 months or more.

5. Nominee directors

Are certain directors appointed by a specific class of stakeholders, lending institutions, or even the government through contracts as third parties in acting as an agent for these institutions.

6. Executive directors

They are full-time, working directors of the company who are entrusted with managing the affairs of the company and are provided with higher responsibilities, including protecting the rights of the shareholders.

7. Non-executive directors

unlike the executive directors, who do not get thoroughly involved in daily affairs but have an important hand in deciding various policy decisions and planning processes for the benefit of the company.

8. Small shareholder's directors

A company listed in any of the stock markets, shall after the notice of 1000 shareholders or 10% of the total number of small shareholders, whichever is lower, shall appoint a director which would be appointed by the stakeholders.

Conditions for appointment of a director

1. He/she must not have been imprisoned for any period under any law or have been imposed fine under any statutes for the time being in force,

2. He/she must have not been detained or convicted under the conservation of foreign exchange and prevention of smuggling activities act, 1974,

3. The minimum and maximum age limit for the directors are 25 and 70 respectively, however, if the company wants to appoint someone other than the ages mentioned, they can do so by passing a special resolution in the annual general meeting of the meeting or taking approval of the union government

4. They should be a managerial person in one or more companies and must draw considerations from one or more companies, subject to the limitations specified in section III part II of schedule XIII

5. He/she must be a resident of India and must fulfil all specific conditions related to the approval of residential status.

Frequently asked questions

1.Is it mandatory to appoint a residential director?

A company established in India must consist of at least one director who is a resident. Who has stayed in India for 182 days or more and has fulfilled all conditions of being an appropriate resident

2. Can the company appoint more than 15 directors?

Yes, the company can do so by passing a special resolution in the general meeting of the company.


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