Understanding the role of different Directors in a Private Limited company

Private Limited company is one of the most common entities worldwide. Directors play a chief role during the incorporation as well as post-incorporation process.

A Director is someone appointed to the Board of a company. The professionals that are hired by company's shareholders to handle business affairs form the Board of Directors. Considering the fact that a company operates as an artificial legal person created by law, it's essential to operate only through the agency of natural persons. This is why the management of a company is entrusted to a group of persons known as Board of Directors.

A Director can also be defined as an administrator who controls or directs something, especially commercial company's member. He is the one who is appointed by the shareholders of a company to handle company's policies and is authorised to manage the affairs of a company.

Types of Directors in a Private Company

Different Directors play different roles in a company. The ones that are usually appointed are:

Managing Director

A Managing Director is a director who, by the virtue of an agreement with the company or as a result of resolution passed in its general meeting, or by the Board of Directors, is given substantial powers to manage company's affairs.

Executive Director

An Executive Director, also known as Whole-time Director, is responsible for full-time management of a company.

Ordinary Director

Responsible for attending board meetings of a company, an Ordinary Director participates in the matters put in front of the Board of Directors. These directors are neither whole-time directors nor Managing Directors.

Additional Director

The Board of Directors appoint an Additional Director between two annual general meetings. Additional Directors hold office only until the next annual general meeting of an organisation. The number of Additional Directors and Directors shall not exceed the maximum strength set for the Board of Directors.

Alternate Director

Appointed by the Board of Directors in a general meeting, an Alternate Director is responsible for performing the duties of a Director or the Original Director in his absence for not less than three months. Usually, an Alternate Director is hired for foreign collaborators of an organisation.

Professional Director

Any Director with professional qualification and no pecuniary interest in the company is known as a Professional Director. When it comes to large companies, these professionals are sometimes appointed to the Board to utilise their experience and expertise to manage a company.

Nominee Director

Private equity investors and banks that grant debt or equity assistance to an organisation generally impose a condition according to which the company needs to appoint Bank's representative on the Board. These nominated professionals are known as Nominee Directors or Resident Directors.

Directors, regardless of their type, play an important role in a company. They are responsible for business success. Thus, whether you need resident directors services or want to appoint a Professional or Alternate Director, ensure to hire a professional who can handle your business affairs efficiently and utilise his experience to identify, formulate, and implement workable business strategies that can drive your business toward success.