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TYPES OF DIRECTORS

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DIRECTORS

The company carries on its business through individuals called directors.

Collectively they are called Board of Directors

No body corporate, association or firm can be appointed as a director of a

company, and only an individual can be appointed

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DIRECTORS

Director includes any personoccupying the position of director,

A person having control over the

direction, conduct, managementof the affairs of a company. Anyperson in accordance with whosedirections or instructions, theBoard of a company is accustomed

to act, is deemed to be a directorof the company.

Only individuals can be directors

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CONSTITUTION

Every Public Company must have at least 3 directors

A Public Company having A paid up capital of Rs. 5 crore or more and One

thousand or more shareholders Can elect a director by small shareholders.

A private company must have at least 2 directors

Subscribers of the memorandum who are individuals, are deemed to be the

directors of the company, until the directors are duly appointed in accordance

with the Act.

Directors are appointed in general meeting, in board meeting, by central

government, by proportional representation or a person can stand for

directorship, if eligible.

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A company can have a maximum number of 12 directors and to

increase this number, the approval of Central Government is required.

The board of directors can appoint Additional Directors, by passing a

resolution, if such a power exists in the articles.

If any vacancy arises in office of any director then subject to the articles, the

board of directors can fill the vacancy at a meeting of the board.

One single resolution can appoint one director only and two or more.

A company, at a general meeting may, by ordinary resolution, increase or

reduce the number of its directors within the limits fixed in that behalf by its

articles.

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CONSTITUTION(Continued)

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TYPES OFDIRECTORS

InsideDirectors Outside

Directors

ProfessionalDirectors

NomineeDirectors

SpecialDirectors orExecutiveDirectors

IndependentDirectors

Interesteddirectors

GovernmentDirectors

Whole-time

directors

Managing

Director

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APPOINTMENT OF DIRECTOR

AnyAny personperson cancan bebe eligibleeligible forfor appointmentappointment toto thethe OfficeOffice

OfOf DirectorDirector atat anyany AnnualAnnual GeneralGeneral Meeting,Meeting, ifif

He himself or some member intending to propose that

person as a director.

Gives a sign notice in writing to company.

Signifying that persons for the office of director

Along with a deposit of Rs. 500/- which is refundable subject

to appointment as a director

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REMOVAL OF DIRECTORS

Removal Of Directorsisconferred upon Shareholders,

Central Governmentand CompanyLaw Board

A company may, by ordinary resolution, remove a director (not being adirector appointed by the Central Government in pursuance of section

408) before the expiry of his period of office. This provision shall not apply

where the company has availed itself of the option given to it of

proportional representation on the Board of Directors to appoint not less

than two-thirds of the total number of directors according to the principle

of proportional representation.

Special notice shall be required of any resolution to remove a director, or

to appoint somebody instead of a director so removed at the meeting at

which he is removed.

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VACATION OF OFFICE BY DIRECTORS

The directorship of a director automatically ceases if,

He fails to obtain qualification shares

He fails to pay any call in respect of shares

He absents himself from 3 consecutive meetings of the board of

directors, or from all meetings of the board for a continuous

period of 3 months, whichever is longer, without obtaining leave of

absence from the board

He is removed by the shareholders by resolution passed in a

general meeting

A company can remove a director even before the expiry of his period of

office

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DISQUALIFICATION OF DIRECTORS

A personshallnot becapableof beingappointeddirectorofa

company,if

he has been found to be of unsound mind by a Court of competent

jurisdiction and the finding is in force

he is an undercharged insolvent

he has applied to be adjudicated as an insolvent and his application

is pending

he has been convicted by a Court of any offence involving moral

turpitude and sentenced in respect thereof to imprisonment for not

less than six months, and a period of five years has not elapsed

from the date of expiry of the sentence

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ADDITIONAL DIRECTORS

The Board of directors may appoint additional directors if such

power is conferred on it by the articles of the company. Such

additional directors shall hold office only up to the date of the next

annual general meeting of the company

The Board of directors of a company may, if so authorized by its

articles or by a resolution passed by the company in general

meeting, appoint an alternate director to act for a director during

his absence for a period of not less than three months from the

State in which meetings of the Board are ordinarily held

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REMUNERATION OF DIRECTORS

DIRECTORS REMUNERATION

The overall maximum

remuneration payable to directors

and its managers in one financial year

Not more than 11% of the net

profits of the company for that

financial year

If a company has only one director Not more than 5% of the net

profits

If a company has more than one

director

Not more than 10% of the net

profits for all of them together

The director is not a whole time

director

Not more than 1% of the net

profits

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LOANS TO DIRECTORS

A company provides loan to its director (for a guarantee or security) or the

related parties, with proper approval from Central Government. This is to

ensure that the Board Of Directors of a public company does not misuse the

funds of the company for the benefit of its directors.

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SPECIALAUTHORITIES

Directorscanexercisecertain powersonlyatthemeetingsofthe board

relatedtosomesignificantmatterswhich needdeliberations

anddiscussion, Theyare,

Make Calls on shareholders in respect of money unpaid on their

shares

Issue debentures

Borrow moneys otherwise than on debentures

Invest the funds of the company

Make loans

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Thank You!