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Director signifies a person that manages or controls the activities and business operations of the company and helps in conducting the business. Director as the name suggests directs the actions of the company. A person can be appointed as director of the company either by the Board of directors or by its shareholders.
An Individual can only be appointed as a Director in the Company. Director on Board, of a Limited Company are appointed by the Shareholders of the company who, with other directors, has the responsibility for determining and implementing the company's policy. It is not necessary that the director of the company should also be a shareholder or an employee of the company. Any acts of the Directors are on the basis of resolutions passed at the meeting of Board of Directors. They derive their powers from the corporate legislation and articles of association of the company.They are the company's agents, and can bind the company with valid contracts entered into with third-parties such as buyers, lenders, and suppliers.Common Confusion with the Name "Director"
Many Companies use this term of Director throughout different business functions or roles e.g. director of human resources, director of finance, director of administration, but in real sense they are not the Directors of the Company since they are not appointed by the shareholders of the company. These Directors do not have the power to Provide direction for the organization, make decisions on major issues of the company until and unless the power are delegated to them by the Board of Directors of the company. The board of director can delegate its power within the limit prescribed in the Companies Act, 2013.
Number of directorships a Single Individual can Have?
An Individual can hold office as a director inonly Twenty Companies, i.e., private limited and public limited company together at the same time, with a condition that his office of directorship in public companies shall not exceed ten. It means that an individual can hold office of director in Twenty Private companies, but if he is also holding the position of director in public companies, his directorship in public companies shall not exceed ten.
Disqualifications for appointment of director in a Company.
- A person of unsound mind and stands so declared by a competent court;
- An Individual who is unable to pay his debtsand is declared as an undischarged insolvent cannot be appointed as director in a company.
- If the application of a person who has applied to be adjudicated as an insolvent is pending ,then such person also cannot be appointed as director in a company
- If a court or Tribunal has passed an order disqualifying any person for appointment as a director and the order is in force.
- If an Individual has been has been convicted by a court and has been sentenced to imprisonment for not less than six months for any offence whether involving moral turpitude orotherwise and five years has not elapsed from the date of expiry of such sentence:
- Age: A person must be at least 18 years of age to be appointed as director of the company.And In case of appointment as Managing Director, Whole time Director an individual must be minimum 21 years of age and maximum being 70 years. However a person having age greater than 70 years can become director of the company by passing Special Resolution by shareholders of the company.
- Educational Qualification: No educational qualification is required to be appointed as Director of the company.
- DIN: A person shall obtain DIN before appointment as Director in a Company.DIN stands for Director Identification Number. It is the unique identity number given to the person who intends to become director and is valid for lifetime.
Disclaimer: Statements and opinions expressed in articles are those of the author's personal views.
About the author: Satyendra Kumar Mishra
Satyendra Kumar Mishra is the founder and CEO of EmpressLegal.com which was founded with the singular objective of offerings the highest quality corporate and incorporation services to its clients all over the globe. Since its foundation, EmpressaLegal.com has helped entrepreneurs across India to incorporate their businesses in a fast and secure manner.