Types of Directors in Pvt Ltd Company or Public Ltd Company

  • April 13, 2022
  • Dushyant Sharma
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The director position in the company is considered most important because we all know that the company, whether Public Limited Company or Private limited Company only a legal person, unlike a living human being. To enable a company to achieve its objective and growth, it must depend on some agency, known as the board of directors.

Members of the Board of Directors of the company are known as directors, who manage a company. In brief, we can say that Directors are the company's brain.

  • Managing Director:

The managing director (MD) is the person who is entrusted with the substantial powers of the management of the affairs of the company. Under the new Companies Act, 2013 MD is considered KMP (Key Managerial Person). MD draws his power from the articles of association and the agreement executed.

  • Whole Time Director:

Whole-time director (WTD) means a person who devotes his whole time to the company's affairs. There is practically no difference between MD and WTD because all legal provisions that apply to the both are identical except the terminology.

  • Ordinary Director:

The ordinary director is the person who is usually appointed to have a quorum at the board meeting. They are not involved in day to day working of the company. They usually get their compensation in terms of sitting fees. Sitting fees are given to director to attend the board meeting.

Also Read: Essential Points to Become Director in the Company

  • Additional Director:

Powers to appoint directors to reside with the shareholders at the AGM (Annual General Meeting) or EGM (Extra-Ordinary General Meeting). Suppose a person has to be appointed in between these two meetings. In that case, Board of Directors can appoint him if AOA (Articles of Association) of the private limited company or public limited company allows doing so. So, when the Board appoints the person in this manner is called the additional director. Tenure of the additional director is up to coming to AGM if a person is not appointed at the AGM then directorship of the additional director is ceased w.e.f. the date of AGM.

  • Alternate Director:

An alternate director is like a proxy director. He is appointed in place of the original/principal director when the original director/principal director is absent for not less than 3 months from India. An alternate director cannot hold office for a period longer than that permissible to the original director in whose place he is appointed.

  • Nominee Director:

As the terminology itself explains that nominee director is a director who is nominated by the bank or other financial institution on the board of the company. This usually happens when a company takes a loan from a bank or financial institution. The primary purpose of appointment of the nominee director is to ensure that Borrower Company complies with all laws. A nominee director is like a watchdog of the financial institution to safeguard its money.

  • Independent Director:

Independent director has a prominent position under the companies act, 2013. This concept of Independent director first time has been codified in the Companies Act, 2013. There are different criteria based on which a person can be appointed as Independent Director in the company such as who is related to the promoter of the company or its subsidiary company, who has no financial relationship with the company, who holds not more than 2% of the voting power of the company etc.

Independent director looks after and try to enforce the best governance practices in the working of the Pvt. Ltd or Public Ltd Company. He has to judge independently without any partiality. Therefore, Independent director is a critical instrument for ensuring the good corporate governance in the company.

Appointment of Independent Director is mandatory in case of listed companies another class of companies.

These are different classes of directors that you can find in different companies.

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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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