Concept of Director in a Company

 who is a director?

There is no such hard and fast definition of a director. It can be understood as the person who directs or sets out the plans and policies or who determines the action is known as the director.

As we know a company is not a natural person and it is an artificial person having a separate legal entity. So, a company cannot function by itself, it needs personnel who will help the company to carry out its day-to-day function. People might say that the real owner of a company is are its shareholders and thus they can carry out the activities of a company. But it is not true entirely as shareholders can be plenty and when plenty of shareholders want to control a company then it will create chaos. Thus, the concept of separate management was introduced where the company will be managed by the Board of Directors who will be appointed by the shareholders.

Section 2(34) of the Companies Act, 2013 defines the word director and Section 2(10) of the companies Act defines the word Board of Directors or Board. Broadly there are three types of companies i.e., a public company, a private company, and a one-person company. The minimum number of directors needed in a public company is three and the maximum number of directors needed in a public company is fifteen, the minimum directors needed in a private company is two the maximum directors needed in a private company is two, minimum directors needed in a one-person company is one and the maximum directors needed in a one-person company is fifteen. If the companies want to cross the maximum limit, then they can do it by passing a special resolution.

Director is one of the key managerial personnel of a company. Key managerial personnel has been defined under section 2(51) of the companies Act and it includes the Chief Executive Officer or the managing director or the manager, company secretary of the company, whole-time director of the company, chief financial officer of the company and any other officer as may be prescribed.

As we know that director is key managerial personnel under the Act thus it is important to know all the information regarding the director. Section 170 of the Companies Act provides the provision for it. According to this section, companies are required to keep and maintain a register containing information regarding its directors such as name, address, details of security held, etc.

Section 165 of the Companies Act provides for the Number of Directorships. According to this section a person cannot hold or act as a director of any type in more than 20 companies at the same time. Though this number can be reduced or minimised by a company with respect to its director, by passing a special resolution.

Directors are the backbone of the management of a company. They are considered as the agents as well as the trustees of the company. There are various activities they need to function to discharge their duties in a company.