Introduction

A company is an artificial person which means it does have a legal entity, but it does not have any physical existence. That is why a natural person is needed to manage its day to day affairs. Only a natural person can be a director i.e., an individual. The first directors are appointed by the subscribers of the memorandum. If no first directors are appointed then the people who are subscribers become the first directors. The first directors hold the office until the first Annual General Meeting (AGM) is not conducted. Directors owe commitments to the company, directors are appointed by the company’s board to run the achieve company’s endeavors for the upsides of the investors.

Number of Directors in different types of companies

Every company must have directors. The least number of directors that every company should have is mentioned in Section 149 of The Companies Act, 2013.

• Public Company: 3 or more
• Private Company: 2 or more
• One Person Company: At least 1

Though a company cannot have more than 15 directors. This number can be increased if they pass a special resolution for the same.

Different Duties of Director

The position of the director in any company might be difficult to explain. Directors sometimes play the role of trustees, sometimes as agents and sometimes also as managing partners of the company.

• Directors as Agents

The directors are the agents of a company according to law. The company being an artificial person can act just through the directors. Concerning, the connection between the directors and the company is just similar to the common connection of principle and agent. The connection between the directors and the company falls under the ambit of the general principle of agency. At the point when a director signs in the interest of the company, it is the company that is held liable and not the director. Additionally, they are also required to disclose if they have any personal interest in the said transaction.

• Directors as Trustees

Directors are also trustees of all the assets of the company. A trustee can make contracts in regard to the trust property in his name however the directors do not have the authority to do so. They can make such agreements under the common seal of the company. They are only quasi trustees because they are not trustees for the debt of the company or its creditors or shareholders. The directors while working as a trustee should also act in good faith.

• Directors as Managing Partner

In a company, the administration is in the possession of plural directors. Along these lines, the directors are partners (the term partner used in the sense of the Partnership Act. Though a director cannot act without prior approval of the Board of Directors. That is why unlike a partnership firm a single partner cannot act as a managing partner in a company.

Conclusion

The Directors should always stay vigilant to avoid threats against them or the company. They should try to attend each board meeting and should be fully aware of the company’s business. Only participation in the meeting is not anymore enough, it also must be ensured all questions or expressed dissents are properly recorded within the minutes of the meeting, this is often extremely important and maybe pertinent evidence to avoid the legal hassles at a later date. Proper training for directors on Corporate Governance is important and can equip them to figure within the best interest of the organization.

By

Vaidik Sharma
B.A.LLB 5th Year
Bharati Vidyapeeth, New Law College, Pune