Directors of the company are one of the most important part who plays the major role in managing its activities. The directors of the company are entrusted with the major responsibilities of the companies and are empowered to take the decisions on its behalf. The group of directors form of the board of directors and pass the resolutions regarding the various affairs of the company. According to the laws and regulations applicable every company must have minimum 2 directors and maximum number of directors can go up to 15. Here we will be discussing some other provisions related to the directors of the company. Today we will be discussing the eligibility criteria for becoming a director of the company and the kinds of directors.
What is the eligibility criterion for becoming the director of the company?
To become the director of the company the person is required to fulfil the below mentioned criteria-
- Nationality – There is no specific nationality mentioned in the act for the director. Thus, a person of any nationality can become the director of company.
- Age Limit- In order to become the director of the company a person must be 21 years old or above. Thus, if a person is below 21 years of age he is not eligible to become a director of company.
- Disqualifications – Any person will be disqualified to become the director of the company if he has not filed the return of any previous years, a person is not of the sound mind and the person who has the past records of criminal case.
For becoming the director of the company a person is required to fulfil the above mentioned eligibility criteria. There are different kinds of directors in the company according to their functions in the company.
Which are the different kinds of directors in a company?
The different kinds of directors in the company are as follows-
Independent Director – An independent director is a director who is non-executive and independent. Being independent such directors are not related to the company and act in a credible manner. The director once appointed stays the non-executive director of the company for a total period of 5 years and is reappointed by passing the special resolution. According to the rules and regulations of the companies every company fulfilling the below mentioned criteria is required to appoint two independent directors –
- Public Companies with Paid-up Capital of INR 10 Crores or more,
- Public Companies with Turnover of INR 100 Crores or more,
- Public Companies with total outstanding loans, deposits, and debenture of INR 50 Crores or more.
For being the resident in country a person is required to live in India for a period not less than 182 in a calendar year. The same condition applies to the directors also and they are considered as residential director if they fulfil this condition.
A company may appoint the additional director under the section 161(1) of the Companies Act 2013. He shall be appointed till the conduct of the next annual general meeting.
In case of oppression and mismanagement the group of people may appoint an nominee shareholder. The nominee director is the representative of the group of peoples including the shareholders, banks, financial institution etc.
When a director of the company is absent from his position for a total period of more than 3 months a director is appointed in his place. The director appointed in place of director is known as the alternate director.
Small shareholder director
A director representing the interest of the small shareholders is known as the small shareholder director. These directors are appointed after receiving the notice of minimum 1000 small shareholders or the 10% of the total number of shares whichever is lower.
With the new rules in place every private limited or the public limited company following the below mentioned criteria is required to appoint the women director. Following are the conditions to be satisfied for the mandatory condition of appointing one women director –
- The company is a listed company and its securities are listed on the stock exchange.
- The paid-up capital of such company is INR 100 crore or more with a turnover of INR 300 crores or more.
These are the different kinds of directors present in the companies registered in India.