Chapter XI Section 149-172 of the Companies Act, 2013 deals with Appointment and Qualification of the directors of the company. Section 2(34) of the Act prescribed that “director” means a director appointed to the Board of a corporation .
Section 2(10) of the businesses Act, 2013 defined that “Board of Directors” or “Board”, in reference to a corporation , means the collective body of the administrators of the corporate
Directors are individuals that are elected as representatives of the stockholders to determine corporate management related polices and to form decision on major company issues. The success of the company depends upon the competence and integrity of the directors.
Below are some important provisions and points related to Directors of a company:-
1) Section 149: This sections states that every company should have board of directors ,Further this section states that a minimum number of three directors must be there in the case of a public company, two directors within the case of a personal company, and one director within the case of a 1 Person Company. The company could appoint more directors by passing the special resolution in its general meeting .A company can have minimum of 15 directors Also, the companies should make a note that they must have atleast one women director.
Chapter XI Section 149-172 of the Companies Act, 2013 deals with Appointment and Qualification of the directors of the company. Section 2(34) of the Act prescribed that “director” means a director appointed to the Board of a corporation .
Section 2(10) of the businesses Act, 2013 defined that “Board of Directors” or “Board”, in reference to a corporation , means the collective body of the administrators of the corporate
2) Types of Directors
I. Independent Director: An independent director is a non-executive director without a relationship with a company. They just help the company to improve their corporate credibility and enhance government standards. Section 149(4) read with Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014 provides following companies to have specified number of independent directors.
1) Appointment Term of Independent Director: Term shall be of maximum 5 years. And term shall not be more than 2 consecutive terms. And shall be re-appointed only by Special Resolution by the corporate .
2) Remuneration of Independent Director: May receive remuneration by way of fee provided under 197(5), reimbursement of expenses for participation within the Board and other meetings and profit related commission as may be approved by the members.
Some of the foremost significant functions, duties, and liabilities of the independent directors, are the subsequent (as per the Schedule IV of the CA-2013): —
1. To assist in forwarding equitable and independent judgment to the board
2. To secure and promote the interests of all stakeholders of the concerned company, particularly of the minority shareholders
3. To conciliate and balance the conflicting interests of the stakeholders
4. To attend actively and constructively most of the board and committee meetings
5. To pay proper and adequate attention to Related Party Transactions (RPTs)
6. To report concerns honestly and impartially about any unethical behavior, violation of the code of conduct, or any suspected fraud in the company.
Appointment Term of Independent Director: Term shall be of maximum 5 years. And term shall not be more than 2 consecutive terms and shall be re-appointed only by Special Resolution by the company.
Remuneration of Independent Director: May receive remuneration by way of fee provided under 197(5), reimbursement of expenses for participation within the Board and other meetings and profit related commission as may be approved by the members.
Retirement by Rotation of Independent Director in AGM: Shall not be applicable to appointment of independent directors.
Vacancy of Independent Director: To be filled within the very next committee meeting or within 3 months of such vacancy, whichever is later.
Separate Meeting of Independent Director: The independent directors of the corporate shall hold a minimum of one meeting during a year, without the attendance of non-independent directors and members of management;
Some of the foremost significant functions, duties, and liabilities of the independent directors, are the subsequent (as per the Schedule IV of the CA-2013): —
1. To assist in forwarding equitable and independent judgment to the board
2. To secure and promote the interests of all stakeholders of the concerned company, particularly of the minority shareholders
3. To conciliate and balance the conflicting interests of the stakeholders
4. To attend actively and constructively most of the board and committee meetings
5. To pay proper and adequate attention to Related Party Transactions (RPTs)
6. To report concerns honestly and impartially about any unethical behavior, violation of the code of conduct, or any suspected fraud in the company.
Small shareholder holds shares of nominal value of not more than twenty thousand.
A listed company may have one director elected by such small shareholders. This section clearly states that it is not necessary to have a director appointed by small shareholder (as the word “may” is used).
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