Private Limited Company Directors: Roles And Functionalities

In a Private Limited Company or PLC, Directors plays important functioning roles from taking business decisions to looking after business operations. Directors are the key people on whom Shareholders of a company trusts while investing money. Here in this article, we shall discuss how a company can have a new director on its Board legally in India.

Role of Director in a PLC

As per Companies Act, 2013 a “Director” is a person appointed to the Board of a company for managing company matters. The role of a Director is to administer, control or direct the affairs of a company and also supervises and manages its matters. In other words, a company acts through its Directors. Hence, a company's management is entrusted to a body of persons called the “Board of Directors”.

How to become a director in a Private Limited Company(PLC)

To become a Director in a PLC, he/she must need a Director Identification Number or DIN Number which can be obtained by anybody who is 18+ from the DIN Cell.

Types of Director in a Company

Following are the types of Director in a company:

Managing Director

With the knowledge of  Articles of Association or as per agreement with the company, the Board of Directors of a company has the power to manage company affairs.

Executive Director

They are also called whole-time Director are people, in full-time employment with the company.

Ordinary Director

He or she is a simple Director who attends company Board meetings and participates in matters and put before the Board of Directors. They are neither Managing Directors or Executive Directors.

Additional Director

A person appointed by the Board of Directors between two general meetings held annually is an Additional Director. An Additional Director will hold office just till the company's next annual general meeting.

Alternate Director

He or she is appointed in a general meeting by the Board of Directors to act in the absence of a Director for a period, not less than 3 months. Usually, an alternate Directors is appointed for a person who is an NRI or is foreign collaborators of a company.

Professional Director

A Director with professional qualification and without any monetary interest in the company is called a Professional Director. Sometimes, in big companies, Professionals are appointed to the Board to use their expertise.

Nominee Director

He or she is a director appointed to the board of a company and represents the interests of his appointer on that board. His appointment is done by a creditor, a shareholder or another stakeholder.

While in an OPC or a One Person Company, a nominee Director is appointed by the sole Director to manage the company in case of incapacitation or death of the sole Director.

What is the maximum and minimum number of Directors in a PLC?

A company may have fifteen Directors to the maximum and the count can be increased after passing a special resolution.

The minimum number of Director in a Company can be as follows:

PLC –Two Directors

Limited Company –Three Directors

One Person Company –One Director

Residency Requirement for Director in a PLC

The Companies Act, 2013 do not prohibit an appointment of a person who is an NRI or foreigner as a Director of a Company. But according to Section 149(3), every company must have at least a Director who lived in India over a span of 182 days in the last calendar year.

Requirement of a Woman Director in Company

All companies that are listed and the limited companies with a paid-up share capital of Rs.100 crore or more or a turnover of Rs.300 crores or more must appoint at least one woman Director. A PLC doesn't require any women Director.

Women empowerment is not just playing a simple role in the corporate sector but must be a part of the process that includes higher-level decision making. As per data, the European countries are leading in appointing Women Directors in their company's board and Norway tops the list with 45% whereas India holds just 4.7%. The percentage of women Directors appointed in a company is expected to increase.