DIRECTORS

UNDER
COMPANIES ACT 2013
Index
Definition

Positions Held by Director

Changing State of Directors

Duties of Director

Power of Director

Appointment /Removal & Resignation
DEFINITION: DIRECTOR


DI RECTOR means a director appointed to the
Board of a Company. 2(34)



BOARD OF DI RECTORS or BOARD, in
relation to a company, means the collective body of
the directors of the Company. 2(1)(10)


DEFINITION
POSITIONS HELD BY DIRECTOR
Positions held by director





Managing Director/
Whole time
Director /Manager Officer in Default /Key
Managerial Person






MANAGI NG DI RECTOR - Director by virtue of
Articles/Agreement/Shareholders Resolution


Entrusted with the Substantial powers of Management
of the Company


Includes a director occupying the position of Managing
Director, by whatever name called


OFFI CER I N DEFAULT includes a director in the following
instances:
Whole-time director

Key Managerial Personnel (KMP)

In case of no KMP such director as specified by the
Board and who has consented as such

If no Director is so specified all the Directors

Person with whose advice Board of Directors is
accustomed to act, other than a person who gives in a
professional capacity
















In respect of contravention, director who is aware of
such contravention
By virtue of receipt of proceedings of the
Board
Participation in such proceeding without
objection
Because of his consent for the same










key managerial personnel, in relation to a company,
means
the Chief Executive Officer or the managing director or
the manager;

the company secretary;

the whole-time director;

the Chief Financial Officer; and

such other officer as may be prescribed;







CHANGING STATE OF
DIRECTORS
Change in Law Concerning Directors:

With the new Companies Act, the law has become more stringent for private
companies than for public companies
As per Section 149(1): Every Company shall have a Board of Directors Consisting of
Individuals as director .

Minimum No. of Directors as per Section 149(1)(a):
1.Three in case of Public Company.
2.Two in case of Private Company.
3.One in case of One Person Company.

Maximum 15 Directors
Change in Law Concerning Directors:

RESIDENT DIRECTORS:
Resident Director: As per Section 149 sub section 3 of Companies Act 2013, Board
of Directors of a company, must have at least one resident director i.e. (A person
who has lived at least 182 days in India in the previous calendar year)

The residence requirement would be reckoned from the date of commencement
of section 149 of the Act i.e. 1st April, 2014 .


WOMEN DIRECTORS:
As per Section 149 (1) (a) second provision requires certain categories of
companies to have At Least One Woman director on the board. Such companies
are any listed company, and any public company having-
a)Paid Up Capital of Rs. 100 cr. or more, or
b)Turnover of Rs. 300 cr. or more.





Change in Law Concerning Directors:

INDEPENDENT DIRECTORS:
Independent Director: Independent Director is for the first time introduced in
the Companies Act, 2013 under section 149(6) .

a. Listed Public Company to have at least 1/3rd of the total number of
directors as independent directors.

b. No. of Independent Director for unlisted Company and its subsidiaries will
be prescribed by Central Government.

Change in Law Concerning Directors:

Requirements to be fulfilled as an Independent Director:
(1)Is a person of integrity and possesses relevant expertise and experience;
(2) who is or was not a promoter of the company or its holding, subsidiary or
associate company.
(3) who is not related to promoters or directors in the company, its holding,
subsidiary or associate company.
(4) who has or had no pecuniary relationship with the company, its holding,
subsidiary or associate company, or their promoters, or directors, during the two
immediately preceding financial years or during the current financial year.
Change in Law Concerning Directors:

NOMINEE DIRECTOR:
Nominee Director: As per Section 161(3). Subject to AOA of company, the Board
may appoint any person as a director nominated by any institution in pursuance
of the provisions of any law for the time being in force or of any agreement or by
the Central Government or the State Government by virtue of its shareholding in
a Government company.

ALTERNATE DIRECTORS:
As per Section 161(2) A company may appoint, if the articles confer such
power on company or a resolution is passed (if an Director is absent from India
for atleast three months).
1. An alternate Director cannot hold the office longer than the term of the
Director in whose place he has been appointed.
2.Additionally, he will have to vacate the office, if and when the original Director
returns to India.
3.Any alteration in the term of office made during the absence of the original
Director will apply to the original Director and not to the Alternate Director.
25.
DUTIES OF DIRECTORS


A director shall act in accordance with the articles of the
company


A director shall act in good faith in order to promote the objects
of the company for the benefit of its members as a whole, and in
the best interest of the company, its employees, the shareholders,
the community and for the protection of environment.


A director shall exercise his duties with due and reasonable care,
skill and diligence and shall exercise independent judgment
DUTIES OF DIRECTORS


DUTIES OF DIRECTORS

A director shall not involve in a situation in which he may have a
direct or indirect interest that conflicts, or possibly may conflict,
with the interest of the company


A director shall not achieve or attempt to achieve any undue
gain or advantage either to himself or to his relatives, partners,
or associates



MISREPRESENTATION IN PROSPECTUS
APPOINTMENT &
VACATION OF DIRECTORS



Appointment of Managing Director, Whole Time Director
or Manager to now be approved by special resolution in a
General Meeting compared to the earlier provision
requiring Ordinary Resolution

If appointment is not in accordance with Schedule V of the
Act, then approval of Central Government is also required.

Whole Time Director shall not be appointed for a period of
more than 5 years

Provisions to apply to Private Companies as well

APPOINTMENT OF MD/WTD




The appointment of Independent Director to be approved
by the Company in general meeting

Board may appoint Additional, Alternate & Nominee
Director as the case may be

APPOINTMENT OF OTHER DIRECTORS


DISQUALIFICATION & VACATION

NEW DISQUALIFICATIONS OF DIRECTORS

Person has been convicted for offence dealing with Related
Party Transaction anytime during the previous 5 years

Person has not obtained Director Identification Number

Person has been convicted for any offence and has been
sentenced for an imprisonment extending to 7 years or
more




DISQUALIFICATION & VACATION

VACATION OF OFFICE OF DIRECTOR

Director to vacate his office if he fails to attend all Board
Meetings for a consecutive period of 12 months as opposed to
previous provision prescribing a 3 month period. This even
when the leave of absence has been granted.

If all directors have vacated the office, the promoter shall
appoint minimum number of members

And if that is not possible, the Central Government may
appoint Directors till the Company makes appointment in a
General Meeting



35.
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