Director of a company is a person delegated by the shareholders to manage the activities of the company. Legally, it’s advisable to make any change in the Board of Directors (B0D) of a company as per the provisions given in the Companies Act of 2013. The need for change in the director of a company must be duly justified and approved by all the shareholders/existing directors of the company. Change in director means either removing a director from the Board of Directors list or appointing a new director to the Board of Directors list.
Types of Directors in a Company
Managing Director: MD is a Director, who by virtue of AOA of a company or a written agreement with the company or a resolution passed in company annual general meeting or by its Board of Directors, is delegated with significant powers of managing the businesses activities of the company
Executive Director: An ED is an employee of the company and is deeply involved in managing the business activities of the company. ED actively participates in the day to day affairs of the company.
Non- Executive Director: NED is not in full-time employment of the company, they are generally professionals who have knowledge of the company regarding their profession and do not actively participate in the day-to-day affairs of the company.
Alternate Director: Alternate Director can be appointed by the Board of Directors in a general meeting to act for a Director called the original director during his/her absence for a period of not less than 3 months or more from India.
Additional Director: Additional Directors are generally appointed by the company in case of excess workload in the company which can't be managed by existing BOD's or where company requires technical expertise to solve technical difficulty.
Nominee Director: Director appointed by a third party is called nominee Director. These directors are generally nominated by the Financial Institutions in pursuance of any law or any agreement or by central/state government by virtue of their shareholding in Government company.
Is Removing Director Safe for the Company?
It is completely internal policy of a company to add or remove a Director. There might be many reasons to add or remove, like a Director is resigning from the company, going for a leave or medical conditions, termination/removal of a director, etc.
Noteworthy here are the facts that as per the new Indian Companies Act of 2013, a private limited company must have at least two directors always. On the other hand, a public limited company must have a minimum of three directors at all times. Again, a foreign national can also become a director in any of these types of companies in India, provided he/she meets the requirements prescribed for becoming a company director. For making the appointment of first director Section 152 of the Indian Companies Act of 2013 deals, while Section 168 is relevant for getting resignation/removal of a director from the BOD of a company.