COMPANIES ACT 2013
TYPES OF DIRECTORS
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COMPANY LAW
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DR SHASHI AGGARWAL ( ASSTT PROFESSOR ,USBS
,PUNJABI UNIVERSITY)
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DIRECTORS
1. A COMPANY IS A CORPORATE BODY. IT IS NEITHER A
BODY NOR MIND OF ITS OWN. IT IS AN ARTIFICIAL BEING WHICH IS RUN BY LIVING
PERSONS.
2. EVERY COMPANY
CONSISTS OF A DIRECTOR OR BOARD OF DIRECTORS TO RUN OR ADMINISTER THE COMPANY,
DIRECTORS LOOK AFTER THE AFFAIRS OF THE ESTABLISHMENT. DIRECTOR IS A PERSON
APPOINTED OR ELECTED ACCORDING TO THE LAW OF AUTHORISED TO MANAGE THE COMPANY.
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BOARD OF DIRECTORS SEC 2(10)
1. BOARD OF
DIRECTORS MEANS THE COLLECTIVE BODY OF THE DIRECTORS OF THAT COMPANY. IT
DIRECTS, CONTROLS, MANAGE AND SUPERINTENDS THE AFFAIRS OF A COMPANY.
2. DIRECTORS CAN
EXERCISE POWER ONLY WHEN THEY ACT COLLECTIVELY.
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DIRECTORS
1. DIRECTORS
REFERS TO PART OF THE COLLECTIVE BODY : THE BOARD OF DIRECTORS THAT IS
RESPONSIBLE FOR CONTROLLING,MANAGING AND DIRECTING THE AFFAIRS OF THE COMPANY,
2. CONSIDERED
THE TRUSTEE OF THE COMPANY’S PROPERTY AND MONEY AND THEY ALSO ACT AS THE AGENTS
IN TRANSACTION WHICH ARE ENTERED INTO BY THEM ON BEHALF OF THE COMPANY.
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MEANING OF DIRECTOR
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SEC 2(34) OF THE COMPANIES ACT 2013, DIRECTOR
MEANS A DIRECTOR APPOINTED TO THE BOARD OF A COMPANY.
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DEEMED DIRECTORS: - A PERSON IN ACCORDANCE WITH
WHO’S DIRECTIONS AND INSTRUCTIONS THE BOARD OF DIRECTORS OF THE COMPANY IS
ACCUSTOMED TO ACT SHALL BE DEEMED TO BE DIRECTOR OF THE COMPANY. THESE ARE
KNOWN AS SHADOW DIRECTOR
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POSITION OF DI RECTOS AS AGENTS OR TRUSTEE
1. DIRECTORS CAN
BIND THE COMPANY AS AGENTS ONLY WHEN THEY ACT COLLECTIVELY AS A BOARD OF
DIRECTORS. THE DIRECTORS OWE A DUTY TO THE COMPANY AS WHOLE
2. DIRECTOR OF
THE COMPANY HOLD THE POSITION OF TRUST AND MUST CONFORM TO PROVISIONS OF
COMPANY LAW OR STATUTES.
3. DIRECTORS LIKE
TRUSTEES OCCUPY A FIDUCIARY POSITION. ALMOST ALL THE POWERS OF DIRECTORS ARE
POWER IN TRUST. THE POWER TO MAKE CALLS OR TO FORFEIT SHARES ,TO ISSUE FURTHER
CAPITAL,GENERAL POWER OF THE MANAGEMENT ARE ALL POWERS IN TRUST WHICH HAVE TO BE
EXERCISED IN GOOD FAITH OR THE BENEFITS OF THE COMPANY AS WHOLE DIRECTOR ARE
TRUSTEES OF THE COMPANY AND NOT OF INDIVIDUAL SHAREHOLDER.
4. THE MODERN
DIRECTORS ARE MORE THAN AGENTS OR TRUSTEES OF THE COMPANY
5. THE BOD ARE
THE BRAIN AND ONLY BRAIN OF THE COMPANY WHICH IS BODY AND THE COMPANY CAN AND
DOES ACT ONLY THROUGH THEM.
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TYPES OF DIRECTORS
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FIRST DIRECTORS: AS PER
SECTION 152(1) OF THE COMPANIES ACT.2013, THE FIRST DIRECTORS OF THE COMPANY
ARE TO BE APPOINTED BY THE SUBSCRIBERS OF THE COMPANY. LISTED IN THE ARTICLES
OF THE COMPANIES AND IF THEY DO NOT APPOINT NY ALL THE SUBSCRIBERS WHO ARE
INDIVIDUALS BECOME DIRECTORS.THE FIRST DIRECTOR HOWEVER HOLD THE OFFICE ONLY
UPTO THE DATE OF THE FIRST ANNUAL GENERAL MEETING OF THE COMPANY.
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DIRECTORS (ELECTED DIRECTORS):-ACCORDING
TO SECTION 152(2) EVERY DIRECTOR SHALL BE APPOINTED BY THE COMPANY IN GENERAL
MEETING.
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RESIDENTIAL DIRECTOR: EVERY COMPANY
NEEDS TO APPOINT A DIRECTOR WHO HAS BEEN IN INDIA AND STAYED FOR NOT LESS THAN
182 DAYS IN A PREVIOUS CALENDER YEAR.
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SMALL SHAREHOLDER DIRECTORS:- A LISTED
COMPANY COULD UPON THE NOTICE OF MINIMUM 1000 SMALL SHAREHOLDERS OR 10% OF THE
TOTAL NUMBER OF THE SMALL SHAREHOLDER WHICHEVER IS LOWER SHALL HAVE A DIRECTOR
WHICH WOULD BE ELECTED BY SMALL SHAREHOLDER
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INDEPENDENT DIRECTOR:- ARE NON
EXECUTIVE DIRECTORS OF A COMPANY AND HELPS THE COMPANY TO IMPROVE CORPORATE
CREDIBILITY AND ENHANCE THE GOVERNANCE STANDARDS
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NON EXECUTIVE DIRECTOR WITHOUT A RELATIONSHIP
WITH THE COMPANY WHICH MIGHT INFLUENCE THE INDEPENDENCE OF HIS JUDGMENT
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THE TENURE OF THE INDEPENDENT DIRECTORS UP TO 5
CONSECUTIVE YEARS. BUT THEY ARE ENTITLED TO REAPPOINT BY PASSING A SPECIAL
RESOLUTION WITH THE DISCLOSURE IN THE BOARD’S REPORT.
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FOLLOWING COMPANIES NEED TO APPOINT AT THE
LEAST TWO INDEPENDENT DIRECTORS:-
1. PUBLIC
COMPANIES WITH PAID UP CAPITAL OF INR 10 CRORE OR MORE
2. PUBLIC
COMPANIES WITH TURNOVER OF RS INR 100 CRORES OR MORE
3. PUBLIC
COMPANIES WITH TOTAL OUTSTANDING LOANS, DEPOSITS AND DEBENTURES OF INR OF 50
CRORES OR MORE.
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SMALL SHAREHOLDERS DIRECTORS
1. A SHAREHOLDER
HOLDING ANY NUMBER OF SHARES UP TO 20,000 WILL BE ABLE TO PARTICIPATE IN THE
ELECTION OF DIRECTORS FROM THE SMALL SHAREHOLDERS.
2. SMALL
SHAREHOLDERS MAY HAVE A DIRECTORS FOR PUBLIC LIMITED COMPANY HAVING A PAID UP
CAPITAL OF RS 5 CRORES OR MORE AND 1000 OR MORE SMALL SHAREHOLDERS MAY HAVE A
SUCH DIRECTOR
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RULES 7
1. MAY APPOINT
SUO MOTTO
2. ON THE
APPLICATION OF AT LEAST 1/10 OF SMALL SHAREHOLDERS
3. NOTICE BEFORE
14 DAYS
4. MUST BE
SIGNED BY 100 SMALL SHAREHOLDERS
5. THROUGH
POSTAL BALLOT IN CASE OF LISTED COMPANY
6. MAXIMUM THREE
YEARS
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WOMEN DIRECTORS(A RULE 3 OF COMPANIES
( APPOINTMENT AND QUALIFICATION OF DIRECTORS) RULES 2014 )
( APPOINTMENT AND QUALIFICATION OF DIRECTORS) RULES 2014 )
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WOMEN DIRECTOR:-A COMPANY WHETHER IT WOULD BE
PRIVATE COMPANY OR PUBLIC COMPANY WOULD BE REQUIRED TO APPOINT ONE MINIMUM
DIRECTOR IN CASE IT SATISFY THE FOLLOWING CRITERIA:
1. THE COMPANY
IS LISTED COMPANY AND SECURITIES ARE LISTED ON THE STOCK EXCHANGE
2. THE PAID UP
CAPITAL OF SUCH COMPANY’S INR 100 CRORES OR MORE WITH A TURNOVER OF INR 300 OR
MORE
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ADDITIONAL DIRECTOR: (161(1)) OF
THE COMPANIES ACT, THE ARTICLES OF COMPANY MAY CONFER ON ITS BOD THE POWER TO
APPOINT ANY PERSONS OTHER THAN A PERSON WHO FAILS TO GET APPOINTMENT AS
DIRECTOR IN A GENERAL MEETING AS ADDITIONAL DIRECTOR AT ANY TIME WHO SHALL HOLD
THE OFFICE UP TO DATE OF THE NEXT AGM OR THE LAST DATE ON WHICH THE AGM SHOULD
HAVE BEEN HELD WHICH EVER IS EARLIER.
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ALTERNATE DIRECTORS:-ACCORDING
TO SEC 161(2) OF THE COMPANIES ACT, THE BOD MAY IF AUTHORISED BY ITS ARTICLES
OR BY A RESOLUTION PASSED GM, NOT BEING ALTERNATE DIRECTORSHIP FOR ANY OTHER
DIRECTOR OR HOLDING DIRECTORSHIP IN THE SAME COMPANY TO ACT AS AN ALTERNATE
DIRECTOR FOR A PERIOD DURING HIS ABSENCE FOR A PERIOD OF NOT LESS THAN THREE
MONTH FROM INDIA.
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NOMINEE DIRECTOR:-AS PER
SECTION 161(3) OF THE COMPANIES
ACT,SUBJECT TO THE ARTICLES BY THE BOD MAY APPOINT ANY PERSON AS DIRECTOR
NOMINATED BY ANY INSTITUTION IN PURSUANCE OF ANY LAW FOR THE TIME BEING IN
FORCE OR OF AGREEMENT OR BY THE CG/SG BY VIRTUE OF ITS SHAREHOLDING IN A GOVT
COMPANY
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DIRECTORS APPOINTED IN CASUAL VACANCY: 161(4): IF THE OFFICE
OF ANY DIRECTOR APPOINTED BY COMPANY IN GENERAL MEETING IS VACATED BEFORE THE
TERM OF THE OFFICE, THE RESULTING CASUAL VACANCY MAY BE FILLED SUBJECT TO AOA
AT A MEETING OF THE BOARD MEETING WHICH SHALL BE SUBSEQUENTLY APPROVED BY THE
MEMBERS IN THE NEXT GENERAL MEETING.
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