The Company recruits experts to coordinate its undertakings, and they are called directors, so the people who follow up for the benefit of the Organisation. The Organisation manages the appointment, evacuation, capability and disqualification of directors. Directors assume an urgent part in the corporate administration design of an organisation.
They depend on the obligation of pursuing significant choices, dealing with the issues of the organisation, and guaranteeing its consistency with different legitimate and administrative necessities. The Companies Act 2013, which supplanted the Companies Act 1956, achieved tremendous changes in the structure overseeing directors in India. This blog outlines the arrangements connected with directors under the Companies Act 2013 and discusses private limited company registration.
A brief explanation about Directors under the Companies Act
The directors are defined under section 2(34) of the Companies Act, 2013 as “a director appointed to the board of a company.” A director is a characteristic individual the Organisation selects to give bearings to the company in which he is named. Such directors are likewise called officials of the Company. They share the obligation of accomplishing every one of the objectives referenced in the MOA of the Company. Directors under the Companies Act 2013 are engaged with the administration of assignments and execution, oversight and control of such undertakings.
The fundamental point of directors is to accomplish a definitive point or objective of the Organisation, capability and preclusion of directors, and, surprisingly, their arrangement and evacuation are dealt with by a similar company. A public company should have at least three directors, while a privately owned business should have at least two. For One Person Company, only one Director is required.
Responsibilities of Directors under the Companies Act 2013
The board of Director is capable and responsible for the following:
- Appointment of the senior administration
- Choosing the Company’s techniques and goals and moulding them.
- Directing the Companies towards accomplishing its point of it.
- The Company’s accounts and funds, and so on.
Classification Of Directors
The following are the types of directors under the Companies Act 2013 who are essential for a company:
- Ordinary Director
Such a Director is otherwise called a Straightforward Director. They go to each executive gathering and participate in the issues put before in something similar. They are neither the full-time Director nor the overseeing Director.
- Residential Director
As per section 149(3) of the Act, there ought to be around one person as director in the company who has remained in India for at least 182 days in the past year.
- Managing Director
Section 2(54) of the Companies Act 2013 characterises the Managing Director as a director who, by ethical of the Company’s AOA, concurrence with the Organisation, the leading body of Director or goal passed in the regular gathering has the significant force of overseeing illicit relationships of the Company.
- Alternate Director
Section 161(2) of the Act, the Company designates the substitute director if a director is missing for over 90 days in India. The governing body delegates such a director when a goal is passed in a comprehensive gathering or approved in the AOA of the Company. Such a substitute Director can not hold the workplace for a term more than the directors under the Companies Act 2013 in whose place he has been named, and he ought to clear the workplace the second the first director returns.
- Independent Director
Section 149(6) of the Companies Act 2013 defines an independent Directors as a director other than a managing, whole-time or nominee director who is a person with integrity and possesses relevant experience or who is not related to promoters of a company or its holding, associate or subsidiary companies or who has no financial interest in the company or its holding, associate or subsidiary companies; or who possesses a relevant qualification as required.
- Interested Director
A director who or his relatives, family, firm, body corporate or another association is interested in a contract or arrangement entered into or on behalf of the Company as stated under section 2(49) of the Act.
- Nominee Director
Those who are nominated by the Company for grant of loans by the financial institutions, banks or the government are called Nominee directors under the Companies Act 2013.
- Woman Director
According to section 149(1)(a), there should be at least one female Director in listed companies or certain public companies.
- Small shareholder Director
As per section 151 of the Act, the small shareholder has the right to elect at least one person as a director.
Qualification And Disqualification of Directors under the Companies Act 2013
The Companies Act, 2103 has given provisions regarding the eligibility of a director under section 164, but the qualifications required to be a director are not given under the Act. However, the companies mention the staff of directors in their AOA. The capability and disqualification of directors can also be removed from other provisions of the Act.
Qualifications of Directors under the Companies Act 2013
According to all the provisions related to a Director, the following can be called qualifications of a director under the Companies Act 2013:
- An Indian national
- Must have completed the age of 18 years
- The directors under the Companies Act 2013 must be an individual.
- A person of sound mind
- Must be competent enough to enter into a contract
- If provided in AOA, then it must hold a share qualification.
- Must not be the insolvent person
- Must not be convicted for any of the offences by a Court
- The person should have his DSC (Digital Signature Certificate)
Disqualification Of Directors under the Companies Act 2013
According to Section 164 of the 2013 Act, the following can be reasons for disqualification of directors:
- Unsound person and declared so by a competent court.
- Undischarged insolvent
- Convicted by a court for any offence
- An order was passed for his disqualification of directors under the Companies Act 2013
- Has not to pain for calls in respect of shares of Company
- Has failed to file annual returns or financial statements for continuous three financial years
- Has been unable to repay the deposit or interest, redeem the debentures on the due date or pay a dividend for one year.
Other disqualification:
- He has not got a DIN
- Convicted for an offence dealing with the related party transaction in the preceding five years.
Conclusion
The directors are an integral part of any company. There are specific responsibilities in the Company that only a director can perform. The Act deals with matters related to directors under the Companies Act 2013. Shareholders of the Company appoint these directors, and the qualification and disqualification of directors are mentioned in the AOA of the Company. A strict bar of five years is given to allow a person of appropriate qualifications to represent the Company. However, a provision of appeal is also given in the Company Law along with a thirty days remedial period to rectify any filing error.
