A Private Limited Company is one of the most common business entity in India. In such companies, the Directors play an important role during the incorporation process and the post-incorporation process. This article will cover all the aspects of being a Director in a private limited company.
Companies Act, 2013 defines the term “Director” as someone who is an appointment to the Board of a company. The Board of Directors means a group of those individuals who are elected by the shareholders of a company in order to manage the affairs of the company. Since a company is an artificial legal person which is created by law, it is necessary for it to act only through the agency of natural persons. It can only act through human beings, and it is the Directors with the help of whom mainly the company acts. Therefore, the management of a company is entrusted to a body of persons who are called as the “Board of Directors”.
Another definition of a Director is someone who administers, controls or directs something, especially a member of a commercial company; or one who supervises, controls or manages; or a person who is elected by the shareholders of a company in order to direct the company’s policies; the person appointed or elected according to law, or who are authorized to manage and direct the affairs of a company.
However For a person to become a Director in Private Limited Company, he/she is required to have a Director Identification Number (DIN Number). DIN Number can be obtained from any person who is over the age of 18 by applying to the DIN Cell.
A company can have different types of directors such as:
A “Managing Director” refers to a Director who, by the virtue of the Articles of Association of the company or by an agreement with the company or by a resolution passed at its general meeting, or by its Board of Directors, is entrusted with the substantial powers of the management of the affairs of the company.
Whole-time Director or Executive Director
An Executive Director or a whole-time Director is someone who is in full-time employment of the company.
An “Ordinary Director” refers to a simple Director who attends the Board meetings of a company and he also participates in the matters that are put before the Board of Directors. These Directors are neither the whole-time Directors or Managing Directors.
The Maximum and the Minimum Number of Directors in a Private Limited Company
Only an Individual (living person) can be appointed as a Director in a Company. A body corporate or a business entity cannot be appointed as a Director in a Company. A company can, however, have a maximum of fifteen Directors and it can be increased further by passing a special resolution.
Thus the Minimum Number of Directors that are required n different types of Companies are as follows:
- For a Private Limited Company – Minimum two Directors
- For a Limited Company – Minimum three Directors
- For One Person Company – Minimum one Director
However, in the recent years, there has been a change according to which, the limited The Listed the limited companies who are having a paid-up share capital of Rs.100 crore rupees or more or a turnover of Rs.300 crores or more are required to appoint at least one woman Director. But There is no women Director requirement for a private limited company.