Types of Directors

Executive
Permanent
Director & Small
and Additional
Non- Shareholders
Rotational Directors
executive Directors
Directors
Director

Alternate Nominee Resident Women

Directors Directors Directors Directors

Independent
Directors
Permanent and Rotational Directors

Permanent Director
◦ A person whose period of office is not liable to
the determination by retirement by rotation

Rotational Directors
◦ A person whose period of office is liable to the
determination by retirement by rotation
◦ Not less than 2/3 of the total number of director
◦ Term of office for 3 years and retire at Annual
General meeting
◦ 1/3 of the total number of rotational directors
retire at every Annual General meeting
◦ In the place of retiring directors' new directors
are appointed or the same directors can be re-
appointed
 Executive Director & Non-executive Director

Executive Non-Executive
director Director
• member of BOD
• not involved with
• member of BOD the day-to-day
• fulltime operations
management • Not a part of
responsibilities executive team
Executive Director & Non-executive Director

EXECUTIVE DIRECTOR NON-EXECUTIVE DIRECTOR

As per Rule 2(1)(k) of the Companies Term not defined in Companies Act
(Specification of Definitions Details) Rules
2014
All directors other than Whole Time
‘Executive Director’ means a Whole Time Directors and Managing Directors are
Director as defined in clause (94) of section 2
of the Act” Non-Executive Directors
Whole Time Director includes a Director in
the whole-time employment of the company
To be an executive Director a person should
be Director of the Company
First Directors
Usually named in the AoA or in the manner
provided in the AoA

If AoA does not provide the names then

Subscribers to MoA will be the first directors

One person company- the person incorporating

will be the director until directors are duly
appointed
Small shareholders’ directors
(S/151)
is a shareholder holding shares of nominal value of not more than INR 20,000

obligation on every listed company to have 1 director elected by small shareholders

Is appointed upon notice being given to the company in this regard by not less than
1000 small shareholders or one-tenth of the total number of small shareholders,
whichever is lower.

A listed company also has the option of appointing a director representing small
shareholders of its own accord.
Additional Directors under Sec
161

Articles of Appointment Anyone who Holds office

Association by Board of has failed to until next
should Directors get AGM or last
provide appointed in day when the
a general AGM should
meeting have been
cannot be held
appointed as
additional
director
Alternate Director u/s161
An alternate to
Should not be a
any director
person holding
Articles of during his
Appointment by position as
Association absence for a
Board of Directors alternate director
should provide period of not less
in any other
than 3 months
company
from India
Term- for the for automatic
period that the Vacates office reappointment –
original director when the original original director
could have held director returns and not the
office alternate director
Nominee Directors Sec 149(7)
Appointed by financial institutions

LIC, IDBI – statute proves for appointment of a nominee on

the BoD

Other cases – depends on the negotiation and agreement

between the company and the financial institution
 Resident Director S/149

1. Every company, including a private company, is required to have at least one

resident director, on its board

2. is one who has stayed in India for a period of not less than 182 days during the
financial year

3. in case of a new incorporated company the provision of section shall applicable

proportionately considering the end of the financial year in which it is
incorporated. As per the Companies (Amendment) Act, 2017
Women directors ( S/149)

The following classes of companies, including companies which existed prior to April
2014, are required to appoint a minimum of 1 woman director:

◦ listed companies
◦ unlisted public companies having a paid-up capital of at least
INR 1,000,000,000 (Indian Rupees One billion)
or a turnover of at least INR 3,000,000,000 (Indian Rupees Three billion), as per the
latest audited financial statements
 Independent Directors
1. Section 149(6) provides disqualification for being appointed as Independent
Director

2. To bring about objectivity in Board Decisions

3. should not have a material relationship with the company

4. is not part of the company's executive team

5. is not involved with the day-to-day operations of the company

an independent director is a non executive director of a company who helps the
company in improving corporate credibility and governance standards.

He/ She does not have any kind of relationship with the company that may affect
the independence of his/ her judgment.
Definition: Sec. 149
⦿ An independent director in relation to a company, means a director other than a
managing director or a whole-time director or a nominee director

a) who, in the opinion of the Board, is a person of integrity and possesses relevant
expertise and experience;

(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate
company;

(ii) who is not related to promoters or directors in the company, its holding, subsidiary or
associate company;
(c) who has or had no pecuniary relationship with the company, its holding, subsidiary or
associate company, or their promoters, or directors, during the two immediately
preceding financial years or during the current financial year;

d) none of whose relatives has or had pecuniary relationship or transaction with the
company, its holding, subsidiary or associate company, or their promoters, or directors,
amounting to two per cent. or more of its gross turnover or
fifty lakh rupees or such higher amount as may be prescribed,

whichever is lower, during the two immediately preceding financial years or during the
current financial year;
(e) who, neither himself nor any of his relatives—

(i) holds or has held the position of a key managerial personnel or is or has been employee of the
company or its holding, subsidiary or associate company in any of the three financial years
immediately preceding the financial year in which s/he is proposed to be appointed;

(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately
preceding the financial year in which s/he is proposed to be appointed, of—

A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding,
subsidiary or associate company;

or

(B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or
associate company amounting to ten per cent. or more of the gross turnover of such firm;
(f) who possesses such other qualifications as may be prescribed. (finance, law,
management, sales, marketing, administration, research, corporate governance,
technical operations or other disciplines related to the company’s business.
. Companies (Appointment and Qualification of Directors) Second Amendment Rules,
2018 Dated 7th May 2018
⦿ Every independent director shall, give a declaration that s/he meets the criteria of
independence at the first Board Meeting and first meeting of the Board in every
financial year

⦿ And inform whenever there is any change in the circumstances which may affect
his/her status as an independent director
Mandatory Requirement of the
Minimum no. of Directors
As per sub section 4 of Section 149 of the Companies Act 2013 every listed public
company is mandatorily required to have at least one third of the total number of
directors as independent Directors.

Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014, provides

that Unlisted public companies must appoint at least two independent directors in the
following circumstances:

i) if the paid up share capital exceeds Rs 10 crores

ii) if the turnover exceeds Rs 100 crores

iii) if the aggregate of all the outstanding loans, debentures and deposits exceeds Rs 50
crores
Director Identification Number
(DIN)
Section 152 (3) and (4)

DIN is a unique Director identification number allotted by the Central Government to any person
intending to be a Director or an existing director of a company.

It is an 8-digit unique identification number which has a lifetime validity.

Through DIN, details of the directors are maintained in a database

DIN is specific to a person, which means even if he is a director in 2 or more companies, he has to obtain
only 1 DIN. And if he leaves a company and joins some other, the same DIN would work in the other
company as well