DIRECTORS IN PRIVATE LIMITED COMPANY

DIRECTORS IN PRIVATE LIMITED COMPANY

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Directors in Private Limited Company
Directors in Private Limited Company

DIRECTORS IN PRIVATE LIMITED COMPANY

Most common and popular business type in India is Private Limited Company. Director in Private Limited Company plays the most crucial role.

What does ‘Director’ means?

Companies Act, 2013 has defined ‘Director’ as a person who has been appointed to the Board of Company. Every company has Board of Directors which is a group of individuals elected by shareholders of a company to look after the proper functioning of the company. Director act as a natural agent to represent the company who is in fact an artificial legal person. Therefore, all the actions of the company are governed by a group of people known as ‘Board of Directors’.

To become a ‘director’, one needs to acquire a Director Identification Number (DIN).

 Five Types of Directors: –

  1. Managing Director: – MD is entrusted with substantial powers over the affairs of the company. He has the power to look into the functioning of the company and the power to take decisions on behalf of the company.
  2. Executive Director: – The Executive Director is a person who is in fulltime employment of the company.
  3. Ordinary Director: – Ordinary Director is a simple director who has the power to sit in the Board meetings and participate in the decision making matters.
  4. Additional Director: – Additional Director is appointed by the Board of Directors (BOD) between two annual general meetings. Their tenure is only up to the date of the next annual general meeting.
  5. Professional Director: – Those directors which possess professional qualifications and do not have any capital interest in the company are called Professional Directors.

Number of Directors in a Private Limited Company

A business or corporate entity cannot be appointed as Director of a Company. Only living people (individuals) can be appointed as the Director.

Following are the minimum number of Directors in different types of Companies:

One Person Company: – Minimum One Director is required mandatorily in One Person Company.

Limited Company: – Minimum Three Directors are required in a Limited Company.

Private Limited Company: – Minimum Two Directors are required in a Private Limited Company.

No provision in Companies Act, 2013 is present that prohibits the appointment of any foreigner or NRI as Director of a Company. However, under Section 149(3) of the Act, makes it mandatory to have at least one Director who has stayed in India for a total period of not less than 180 days.

Author: This blog is written by Mr. Aman Tiwari, a passionate blogger & intern at  Aapka Consultant.

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