As per the Companies Act, 2013, directors can be classified into different types based on their roles, functions, and relationships with the company. Here are the main types of directors under the Companies Act, 2013:
1. Executive Director (Section 2(18)):
- Role: An executive director is actively involved in the day-to-day management and operations of the company.
- Functions: They may hold positions such as CEO, CFO, COO, etc., and are responsible for implementing strategic decisions and running the business.
- Relationship with Company: An executive director is both a director and a full-time employee of the company.
2. Non-Executive Director (Section 2(28)):
- Role: A non-executive director is not involved in the day-to-day operations of the company.
- Functions: They provide an independent perspective, participate in board discussions, and may serve on various committees.
- Relationship with Company: Non-executive directors are not full-time employees but play a crucial role in governance and oversight.
3. Independent Director (Section 149(6)):
- Role: Independent directors provide an unbiased and objective viewpoint to the board.
- Functions: They ensure that decisions are made in the best interests of the company and its stakeholders. They are not connected to the promoters or management.
- Relationship with Company: Independent directors are not employees, shareholders, or related parties of the company.
4. Woman Director (Section 149(1)):
- Role: Mandatory for certain companies based on size and turnover to promote gender diversity on boards.
- Functions: Similar to other directors, with a focus on bringing gender diversity and varied perspectives.
- Relationship with Company: Same as other directors, but this position is specifically designated for women.
5. Nominee Director (Section 149(7)):
- Role: Appointed by specific shareholders or groups to represent their interests on the board.
- Functions: Advocates for the interests of the appointing entity and ensures their concerns are considered in board decisions.
- Relationship with Company: Represents the nominating entity but is obligated to act in the best interests of the company.
6. Additional Director (Section 161(1)):
- Role: Appointed by the board between annual general meetings.
- Functions: Participates in board decisions until the next AGM, where shareholders ratify or reject the appointment.
- Relationship with Company: Holds a temporary position until formal ratification by shareholders.
7. Alternate Director (Section 161(2)):
- Role: Appointed by the board to act on behalf of a director temporarily absent.
- Functions: Acts as a substitute, performing the duties of the original director during their absence.
- Relationship with Company: Temporarily assumes the role and responsibilities of the absent director.
8. Small Shareholder Director (Section 151):
- Role: Elected by small shareholders to represent their interests on the board.
- Functions: Advocates for the concerns of small shareholders during board discussions.
- Relationship with Company: Represents a specific category of shareholders but participates in overall governance.
9. Residential Director (Section 149(3)):
- Role: At least one director is required to have stayed in India for a minimum period of 182 Days in the previous calendar year.
- Functions: Participates in board decisions and governance.
- Relationship with Company: Similar to other directors, but with an additional requirement related to residence in India.
10. Professional Director:
- Role: A term often used to refer to directors with specific professional expertise relevant to the company’s industry or operations.
- Functions: Contributes specialized knowledge and skills to board discussions.
- Relationship with Company: Similar to other directors but recognized for their professional expertise.
These classifications help define the specific roles, qualifications, and responsibilities of directors in different capacities within a company’s governance structure. It’s important to note that individuals may fall into multiple categories simultaneously, and their roles can evolve over time based on the company’s needs and their own qualifications and experiences.
