1. Directors of a Company LEB. Session.

2. Types of Directors Director means a person appointed to the Board of a Company. The different types of directors in a company are as follows. 1)Resident Director 2)Women director 3)Small Share Holder’s director 4)Additional Director 5)Alternate Director 6)Casual Director 7)Nominee director 8)Shadow Director 9)Executive Director 10)Non-Executive Director 11)Independent Director

3. Types of Directors of a Company 1)Resident director A Director, who resides in India during the preceeding financial year, for a period not less than 182 days is called a Resident director. Every company shall have at least one resident director. 2)Women director Every listed company and every other public company having paid up share capital of Rs 100 crores and above or turnover of Rs 300 crores and above shall have at least one women director. This stipulation as per section 149 of the Act shall be complied with in 6 months from the date of incorporation of the company. Any intermittent vacancy shall be filled with in 3 months or before the ensuing Board meeting whichever is later. 3)Small share Holder’s director A small share holder is one who holds shares with a nominal value of not more than Rs 20000/- or such other sum as may be prescribed from time to time. A listed company shall appoint one director representing the small share holders, on requisition of not less than 1000 small share holders or 1/10th of the total number of such shareholders whichever is less. The tenure of such director shall not be more than 3 consecutive years and there after they are not eligible for reappointment.

4. Types of Directors of a Company (Continued) 4)Additional Director Additional Directors are appointed by the Board of Directors. They hold the office until the next general meeting or the last date on which the annual general meeting is to be held whichever is earlier. A person, who failed to get appointed in the general meeting, shall not be appointed as an alternate Director. 5)Alternate Director Alternate Director is appointed by the Board if permitted by the articles of the company or by a resolution passed in the general meeting. An alternate director is appointed in the vacancy created due to the absence of a director in the company for a period of more than 3 months from India. The alternate director would hold the office until the director in whose place is appointed returns back to India or until the term of his office whichever is earlier. A person appointed as an alternate director shall not be a director or alternate director in the same company as on the date of appointment. No person can be appointed as an alternate director in the place of an Independent director, unless the person proposed to be appointed as alternate director is qualified to be appointed as an Independent director.

5. Types of Directors of a Company (Continued) 6.Casual Director The Board of Director may appoint a person as Casual Director in the vacancy created on account of vacation of office by an existing director before his term. Such appointment shall be approved by members in the immediate next general meeting. The Casual Director would hold the office until the remaining term of the director who vacated the office. 7.Nominee director Nominee director is a person who is permitted to be nominated by the parties interested in the company as per the provisions of law in force. He is appointed to the board of a company to represent the interests of Financial Institutions, Government and others 8.Shadow Director Section 2(59) defines the term officer. Officer includes any Director. Manager or Key Managerial personnel or any person in accordance with whose directions or instructions the Board of directors or any one or more of the directors is / are accustomed to act. 6.Thus a person, though not being on the board is able to influence the decisions of the board is called shadow director

6. Types of Directors of a Company (Continued) 9)Executive Director The Key Managerial Personnel of a company include Managing Director and the Whole Time Directors. [Section 2 (51)]. As per section 2 (34) of the act, Director, means a director appointed to the Board of a Company. Whole time Director includes a director in the whole time employment of the company [Section 2(94)]. Managing Director is a director who by virtue of, the articles of a company or an agreement with the company, or a resolution passed in its general meeting or by its board of directors, is entrusted with substantial powers of management of the affairs of the company by whatever name he is called [2 (54)] Thus a director who is a part of the board and as well the management of the company is called Executive Director. 10)Non-Executive Director A director who is neither a Whole time Director nor Managing director is called a non-executive director.

7. Types of Directors of a Company (Continued) 11)Independent Director The Independent director is a person of integrity having experience and expertise in the relevant field. He is neither Promoter nor Managing / Whole Time / Nominee Director of the company or its Holding /Subsidiary/Associate Company. He either in his personal capacity or official capacity is not related to the company. Neither he nor his relatives in his / their personal or official capacity have any pecuniary relationship with the company or its Holding / Subsidiary / Associate companies, exceeding prescribed limits specified in the Act. A Public Company having paid up share capital of Rs 10 crores and more; or turnover of Rs 100 crores and above; or aggregate outstanding loans, debentures and deposits exceeding Rs 50 crores shall have at least two independent directors. The number of independent directors in the board shall not be less than 1/3rd of the total number of directors. While calculating the 1/3rd number every fraction shall be rounded off to one

8. The Procedure for appointment of Directors in a Company The first directors of a company would be the subscribers to its memorandum of association, unless provided otherwise by the articles of association. They are deemed as the first directors until the directors are duly appointed. In case of One Person Company, the individual member would continue to be the first director of the company, until the directors are duly appointed. Every director shall be appointed by the company in general meeting No person shall be appointed as a director, unless he has been allotted Director Identification Number (DIN) or such other prescribed number. Every person proposed to be appointed as a director shall furnish the following in the general meeting. DIN / such other prescribed number A declaration that he is not disqualified to become a director under this act. The Articles of Association provides for the procedure of appointment of directors in a company. The company may adopt the principle of proportional representation, where by not less than 2/3rd of the total number of directors of a company are appointed once in three years. The person appointed as director shall give consent to hold the office of director in the company. Such consent letter shall be filed with the Registrar of Companies within 30 days of such appointment. At the first annual general meeting of a public limited company, (held next after the date of general meeting at which the first directors are appointed) and at every subsequent annual general meeting 1/3rd of such rotational directors are liable to retire by rotation The appointment of independent director shall be approved by the company in the general meeting. The notice for general meeting shall contain the justification in choosing the person for appointment as independent director.

9. Director Identification Number (DIN) DIN is a 8 digit unique identity number, which has lifelong validity. It is person specific.If a person resigns one company and joins another company as a director, the same DIN can be used Every person intending to be appointed as a director in a company shall apply for allotment of DIN to Central Government (Ministry of Corporate Affairs). If the application is found to be in order, the competent authority would allot DIN within 30 days of application. Whenever a return / application / information, related to a company is to be submitted by a director, the DIN is required to be mentioned by him under his signature. A person, having a DIN shall not apply for a second one. A person, within 30 days from the date of receipt of the DIN, shall inform the same to the company /companies in which he is a director. If a person contravenes the provisions of the act, and applies for additional DIN or fails to communicate his DIN to the companies in which he is a director, within 30 days of its receipt, is punishable with imprisonment up to 6 months or a fine up to Rs 50000/-. Thereafter if the contravention continues beyond the first day, a further fine of Rs 500/- per day is levied. Every company, within 15 days, from the date of receipt of information, shall furnish the details of DINs of all its directors to Registrar / competent authority. Failing which, the company and the every officer of the company in default is punishable with a fine ranging from Rs 25000/.- to Rs 100000/-

10. Number of Directorships A person shall not hold office as a director, including any alternate directorship, in more than Twenty (20)companies (other than dormant companies), of which directorship in public companies shall not exceed Ten (10). The term public companies for this purpose include private companies which are holding or subsidiary companies of the public company. The members of a company may reduce the captioned limits by passing a special resolution. A person holding directorship in more than 20 companies, within one year from the date of commencement of the Act, a)Shall choose the companies up to the permitted limit, in which he would like hold the office as director and inform them, under intimation to the Registrar having jurisdiction in respect of each of such company. b)Shall resign his office in the remaining companies. If any person holds office of directorship in contravention of the provisions of the act, is punishable with a fine which may range from Rs 5000/- to Rs 25000/- per day after the first, during which the contravention continues.

11. Disqualifications for appointment of a Director. ( Section. 164) 1)A person declared to be of unsound mind by the competent court of law. 2)An undischarged insolvent /A person, whose application is pending for adjudicating him as an insolvent 3)A person, who has been convicted by a court of any offence, and sentenced imprisonment for a period of a)Not less than 6 months, and a period of 5 years has not lapsed from expiry date of such sentence. b)Seven years or more 4)The person has been convicted for an offence u/s188 dealing with the related party transactions at any time during the last preceding 5 years. 5)The competent Court of law / Tribunal has passed an order disqualifying a person for appointment as a director, and the order is in force. 6)Company shares held by him either singly or jointly with others, has calls in arrears for more than 6 months. 7)The person has not been allotted DIN 8)The directors of the following companies are not eligible to be reappointed as a director in the same company or any other company for a period of five (5), years from the date on which the said company fails to comply with the following requirements. a)Non filing of “Financial Statements / Annual Returns” continuously for a period of (3) financial years. b)Failure to make the following payment obligations continuously for a period of one year and more. i) Repayment of the deposits accepted, ii) Payment of interest on deposits, iii) Payment of any dividend declared iv) Redemption of any Debentures on due date. v) Payment of interest on the Debentures The above disqualification does not apply to a person, who is appointed as a director of a company which is in default of clause (a) or clause (b) above; for a period of six months from the date of his appointment. 10)A private company may by its articles provide for any disqualifications for appointment of a director.

12. Retirement of Directors by Rotation Unless the articles of association provide otherwise, the retirement of all the directors shall be as follows. 1)The period of office of not less than 2/3rd of the total number of directors is liable to determination by retirement of directors by rotation. 2)In determining the total number of directors, independent directors shall be excluded. 3)At the first annual general meeting of a public limited company, (held next after the date of general meeting at which the first directors are appointed) and at every subsequent annual general meeting 1/3rd of such rotational directors are liable to retire by rotation.( In case of fraction, number nearest to1/3rd is counted) 4)The directors to retire by rotation are those who have been longest in the office, since their last appointment. Where there are two or directors with the same tenure of office, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot. 5)The vacancy of a retired director is filled in either by appointing the retiring director or some other person, in the annual general meeting. 6)If the vacancy could not be filled in during the general meeting, and in the absence of any resolution passed in the meeting not to fill in the vacancy, the meeting stands adjourned till the same day in the next week( If such day is a holiday the succeeding working day) at the same place and time. 7)On the day of adjournment, if the vacancy could not be filled in, and in the absence of any resolution by the meeting, not to fill in the vacancy; the retired director is deemed to have been reappointed, subject to the following conditions. a)The resolution for the re-appointment of such director has been put before the present or previous meeting and has been lost. b)The retiring director has communicated to the company in writing his dissent for re-appointment. c)The person is neither qualified nor disqualified for appointment d)An ordinary or special resolution is required for his appointment or re-appointment. e)Where appointment of directors need to be voted individually. 8)If a person contravenes the provisions of the act about the appointment of directors, is punishable with imprisonment up to 6 months or a fine up to Rs 50000/-. Thereafter if the contravention continues beyond the first day, a further fine of Rs 500/- per day is levied.

13. Resignation of a Director The following procedure is to be followed for the resignation of a director A director, intending to retire shall give a notice in writing to the company. The Board, on receipt of the notice shall make note of the same The company shall inform the Registrar within such time as may be prescribed. The matter shall be placed in the immediately following general meeting by the board in its report. The Director may also forward a copy of his resignation letter, with the reasons for resignation to the Registrar, within 30 days of his resignation. The resignation of the Director would be effective from the date of receipt of his resignation by the company or the date specified by the director in the notice, whichever is later. The Director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure

14. Duties of Directors A director of a company shall act in accordance with the articles of the company. A director of a company 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 interests of the company, its employees, the shareholders, the community and for the protection of environment. A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment. A director of a company 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 of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company. A director of a company shall not assign his office and any assignment so made shall be void. If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakhrupees

15. Powers of Board of Directors Company is a legal person. The decisions on behalf of a company are exercised by the board of directors as per the provisions of Memorandum and Articles of Association of the company. The powers of board of directors are mentioned in a summary form 1)Powers of the Board to be exercised by the Board by means of the resolution passed at a duly convened Board meeting a)to make calls on shareholders in respect of money unpaid on their shares; b)to authorize buy-back of securities under section 68; c)to issue securities, including debentures, whether in or outside India; d)to borrow monies; e)to invest the funds of the company; f)to grant loans or give guarantee or provide security in respect of loans; g)to approve financial statement and the Board’s report; h)to diversify the business of the company; i)to approve amalgamation, merger or reconstruction; j)to take over a company or acquire a controlling or substantial stake in another company; k)any other matter which may be prescribed in Rule 8 of the Companies (Meetings of Board and its powers)

16. Powers of Board of Directors ( Continued) 2)Certain more powers that shall also be exercised by the Board of Directors only by means of resolutions passed at meetings of the Board: a)to make political contributions; b)to appoint or remove Key Managerial Personnel c)to appoint internal auditors and secretarial auditor; 3)The Board may, by a resolution passed ata meeting, delegate the powers specified in points (d) to (f) above, on such conditions as it may specify to: a)any committee of directors, b)the managing director, c)the manager or any other principal officer of the company, or d)the principal officer of the branch office (in the case of a branch office of the company).