Appointment of Director in a company

Appointment of Director in a company

Introduction

A company director is an individual elected by the shareholders to manage the company's affairs in accordance with its Memorandum of Association (MOA) and Articles of Association (AOA). Since a company is a legal entity, it can only act through the representation of a natural person. Therefore, the Board of Directors, consisting of living individuals, is entrusted with the management of the company. Depending on the shareholders' needs, the appointment of directors may be necessary at various times throughout the life of the business.


Who can be a Director of a Company in India?

To become a director of a company in India, an individual must satisfy the criteria outlined in the Companies Act, 2013, and the Articles of Association of the particular company. The requirements of the Companies Act are uniform, whereas the provisions of the Articles of Association differ from one company to another.

There are two types of directors that can be appointed in a company:

Executive Directors

  • Managing Director

A Managing Director is appointed as a director based on the Articles of Association of a company, an agreement with the company, or a resolution passed in a general meeting or by the Board of Directors. This is because the Board of Directors is responsible for managing the company's affairs and has significant powers in doing so.

  • Whole-time director

An executive director or whole-time director is an individual who is employed by the company on a full-time basis.

Non-Executive Director

  • Independent director

Independent directors are board members of a company who are not financially or personally connected to the company or its management. They offer an impartial viewpoint in the board's decision-making process, ensuring that the company operates in the best interests of all stakeholders.

  • Nominee Director

When banks or private equity investors provide equity assistance to a company, they often require the appointment of their representative to the company's Board. These representatives are known as Nominee Directors.

Read more to know about the Appointment of a Director in a company

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