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Preface: This post was originally published in 2022 and has been updated on July 07, 2025, to provide you with the most current and accurate information.
A Director is one of the highest-ranking officials in a company. To a great extent, they are responsible for ensuring business success and legal compliance. The role of a director is indispensable. Due to this reason, it is mandatory for every company registered under Companies Act 2013 to have directors.
In this blog post, we shall understand the different types of directors in a company. All of them are essential for smooth functioning of the company.
The definition of a director is provided under Section 2(34) of the Companies Act 2013. It defines a director as “a director appointed to the Board of a company.” A director is a natural person (i.e., a human being with legal rights and responsibilities) who is appointed by the company to make decisions for and on behalf of the company.
An artificial person, such as a firm, corporation, company, entity or association, cannot be a company’s director. Directors are also referred to as officers of the company. Each director in a company possesses a unique Director Identification Number (DIN). Without a valid DIN, an individual cannot serve as a director.
There isn’t just one type of director, but many. Each type of director plays a distinct role within the company. Let’s take a look at the major types of directors in a company:
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An independent director is a type of director who does not have any material or financial relationship with the company. They are “outside directors”, meaning they are not a part of the company’s employees.
Their purpose is to assist the company in ensuring good corporate governance and impartiality. They are usually paid sitting fees for attending board and committee meetings.
A residential director is a company director who fulfills the mandatory residency requirement under Section 149(3) of the Companies Act. This section mandates that, “Every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year.”
This requirement helps to ensure every company in India has at least one director who is well-acquainted with the local business regulations and environment.
A small shareholders’ director is a specific type of director who gets elected by small shareholders of a company listed on the stock exchange. According to Section 151 of the Companies Act 2013, a listed company may have one director elected by small shareholders in the manner and terms and conditions as prescribed.
The purpose of a small shareholders’ director is to represent the small shareholders on the board and speak in the interests of such shareholders.
A woman director simply means a female director. Companies Act mandates certain types of companies to include a minimum of one woman director as a member of the board. This requirement is applicable to public companies and private companies if they fulfill the following criteria:
The company is a listed company whose securities are listed on any stock exchange.
The company has a paid-up capital of Rs. 1 Cr. or more, and a turnover of Rs. 300 Cr. or more.
An additional director is a director who the company appoints for a temporary period, to fill in a vacant position or bring in a wealth of expertise. Such a director is appointed via Board Resolution.
According to Section 161(1), an additional director may hold office up to the date of next annual general meeting (AGM) or the last date on which such a meeting should have been held, whichever is earlier.
An alternate director is an individual who attends the board meeting in place of the original director unable to attend the meeting. During the absence of the original director, an alternate director can exercise the same powers and responsibilities.
This ensures the company runs smoothly even in the original director’s absence. It is possible for an alternate director to attend the meeting even if the original director is present in the meeting via video conferencing.
A managing director is one of the most important directors in a company. They are a part of the senior management. They are responsible for managing day-to-day business affairs and are involved in strategic decision-making and smooth functioning of the company.
To achieve goals of the company, a managing director works closely with the CEO and Board of Directors. Investors and clients are often represented by the managing director.
A shadow director is a director who isn’t officially appointed by the company. However, they influence the decisions of the Board of Directors by providing them with directions or instructions that directors habitually follow.
They’re called shadow directors due to the fact that their influence is exerted from behind the scenes. They are not formally appointed, nor are they officially recognized as directors.
An executive director is a type of director who is deeply involved in the company’s day-to-day management. They are responsible for making decisions for the company and shaping its future direction.
They are appointed as full-time employees of the company. The position of an executive director is one of the most senior positions within a company.
A non-executive director is the opposite of an executive director. They are not involved in the company’s day-to-day management. Instead, they offer independent oversight and strategic guidance for the business. They have a part-time commitment to the company, unlike executive directors.
A non-executive director serves on the Board. However, they are not a part of the management team. They are essential for corporate governance and risk management of the business.
For every company registered under the Companies Act 2013, it is mandatory to appoint directors. There are many different types of directors in a company, including independent directors, residential directors, alternate directors, managing directors, etc. All of them have distinct roles and responsibilities essential for the company.
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