02 November 2010
Dear Experts, My query is what is the difference between a director or additional director? 2) what is importance of appointing the direcotr as executive or non executive.
Pursuant to the provisions of section 260 of the Companies Act, 1956 the Board of Directors if authorised by the Articles of Association of the Company appoint a person as an Additional Director to hold the office till the date of the next Annual General Meeting.At the Annual General Meeting of the Company, the Additional Director is either regualrised by the members as a Director of the Company liable to retire by rotation or if not regularised at the AGM ,the additional Director shall cease to hold the office after the conclusion of the AGM.
The term'Director' as defined in the Companies Act, 1956 includes any person occupying the position of a Director by whatever the name called.
Hence, as per this definition Additional Director is also a Director of the Company.
However, an Additional Director is not liable to retire by roatation and holds the office till the date of the next AGM whereas a Director of the Company is laible to retire by rotation at the AGM of the Company only in case of a Public Company or a Private Company which is a subsidiary of a Public Limited Company!!!!
This explanation is as per my understanding of the provisions of the Act and the views of other eminent experts is welcome:-)
02 November 2010
An executive Director is one which is entrusted with some executive powers in relation to the management of the Company. Normally, MD and WTD come within the ambit of the term'Executive Director'
Non - Executive Directors are the ones which do not haveany executive powers in relation to the management of the Company and simply attend the Board/Committee Meetings and are some times also referred to as the Part-time Directors or non-working Directors!!!!!
Executive Directors with their vast experise and in depth knowledge of the business of the Company can proove an invaluable asset to the Company!!!
CAclubindia
