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Who can be a director of a company?
Updated: Oct 14, 2022
source: Toppr
A Private Limited Company is one of the most common business entities in India. In such companies, the Directors play an important role during the company incorporation process and the post-incorporation process. This article will cover all the aspects of being a director in a private limited company.
A Director of a Company is a person that is elected by the shareholders to manage the affairs of the company as per the MOA and AOA. As the company is an artificial person it can only act through the agency of a natural person. Thus, a director has to be a living person and the management of the company is entrusted to its Board of Directors. The appointment of the Directors can be required from time to time based on the requirements of the shareholders of the business.
Definition of Director:
As per Companies Act, 2013 defines the term “Director” as someone who is an appointment to the company board. The Board of Directors means a group of those individuals who are elected by the shareholders of a company to manage the affairs of the company. Since a company is an artificial legal person which is created by law, it must act only through the agency of natural persons. It can only act through human beings, and it is the Directors with the help of whom mainly the company acts. Therefore, the management of a company is entrusted to a body of persons who are called the “Board of Directors”.
Another definition of a Director is someone who administers, controls, or directs something, especially a member of a commercial company; or one who supervises, controls or manages; or a person who is elected by the shareholders of a company to direct the company’s policies; the person appointed or elected according to law, or who are authorized to manage and direct the affairs of a company.
However, for a person to become a director at the time of private limited company registration, he/she is required to have a Director Identification Number (DIN Number). DIN Number can be obtained from any person who is over the age of 18 by applying to the DIN Cell.
DIN is a unique 8- digit Director Identification Number. This number is allotted by the Central Government to any person who is going to be a Director or is an existing director of a company and obtaining a DIN is a very easy task. The DIN number has lifetime validity. With the help of the Direct Identification Number(DIN), the details of the directors are maintained in the database.
The Maximum and the Minimum Number of Directors in a Private Limited Company.
Only an Individual (living person) can be appointed as a Director of a Company. A body corporate or a business entity cannot be appointed as a Director of a Company. A company can, however, have a maximum of fifteen Directors and it can be increased further by passing a special resolution.
Thus the Minimum Number of Directors that are required n different types of Companies are as follows:
For a Private Limited Company – Minimum two Directors
For a Limited Company – Minimum three Directors
For One Person Company – Minimum one Director
Addition of New Directors
How to add a Director to a Company?
In a Private Limited Company, the Directors of the company play a crucial role in the functioning. The conduct of the business and the day-to-day decisions are made by the Directors. The Directors happen to be the key people in which the shareholders of the company trust to invest their money. In this article, we are going to discuss how a company can legally change and have new directors on board in India.