DIRECTORS

We know that company is an artificial legal person having independent existence in the eyes of law.
It has no physical existence. Being artificial person, it has no mind and cant act in its own person. Because
of its artificial nature, it can act only through human agents. These agents are known as Directors.
[Lennards Carrying Co. v. Asiatic petroleum Co. Ltd., 1915 A.C. 705]
As a matter of fact, the company is owned and managed by its members. The members being large
in number and scattered all over the country cant conveniently carry on the business of the company.
Thus to carry on the business, they elect certain persons, from among themselves, to look after the
general administration of the company. These persons are known as Directors, and collectively as Board
of Directors.
The Directors are the brain of a company. They occupy a pivotal position in the structure of the
company. The Directors manage and control the overall affairs of the company.
Definition [Sec. 2(13)]:-
Definition of the Director under the Companies Act is not satisfactory. According to sec. 2(13),
Director includes any person occupying the position of director, by whatever name called. The definition
of Director given in this clause is an inclusive definition. It includes any person who occupies the position
of a director is known as Director whether or not designated as Director.
Under Sec. 2(30), a Director is an officer of the company. Sec. 307 lays down that any person in
accordance with whose directions or instructions, the Board of directors of a company is accustomed (used
to) to act is deemed to be a director of the company.
Thus the important factor to determine whether a person is or is not a director is to refer to the
nature of the office and its duties. Therefore Director is a person who directs controls and supervises the
overall management of the companys affairs. It is immaterial by what name he is called.
Only individual can be Directors [Sec. 253]
According to Sec. 253 of the Act only an individual can be appointed as director. A firm, association,
or a company cant be a director of the company. The idea behind this is that as the office of a director is
to some extent an office of trust, there should be somebody readily available who can be held responsible
for the failure to carry out the trust. [Oriental Metal Pressing Works (Ptv.) Ltd. v. Bhaskar Kashinath
Thakre, AIR 1961 SC 573]
Minimum and Maximum number of Directors [Sec. 252]:-
The Company Act has fixed the minimum number of directors which a company must have. These
are different for public and private companies.
i. Every public company must have at least three directors.
ii. Every other company (i.e. private company, a deemed public company, which has become so by
virtue of Sec. 43A must have at least two directors.
A public company having
(a) a paid up capital of Rs. 5 Crore or more; and
(b) 1000 or more small shareholders may have a director elected by such small share holders in the
manner as may be prescribed.
Small shareholder means a shareholder holding shares of nominal value of Rs. 20,000 or less in a
public company.
Minimum No. of Directors

Public Company Other Company






Increase or decrease in the number of Directors:-
The Company Act does not prescribe any maximum number of the directors on the Board. But the
articles of a company usually prescribe a maximum number of directors for its Board of Directors.
Normally this maximum never exceeds twelve.
A company may increase or reduce the number of its directors by an ordinary resolution passed in
general meeting so long as the total number remains within the maximum and minimum limit fixed by the
companys articles and the Companies Act. [Sec. 258]
However if a public company or its subsidiary company wants to increase the number of directors
beyond 12, it can be do so only with the approval of Central Government [Sec. 259]
A private company can increase the number without any approval of Central Government by
simply passing an ordinary resolution. However, if the increase is beyond maximum number fixed in the
articles, then the relevant articles should first be amended.

Company having share
capital 5 crore or more
and at least 1000 small
share holders
At least two directors
Other Companies
At least 3 directors and
one of director may be
a representative of
small share holders
At least 3 directors