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A company is an artificial person, it must be represented by living individuals. Directors play a crucial role in a company's operations, conducting business and handling daily affairs. According to Section 2(34) of the Companies Act, 2013 "director means a director appointed to the Board of a company" where "Board of Directors or Board, in relation to a company, means the collective body of the directors of the company". According to Section 149 of the Companies Act 2013, "every company shall have a Board of Directors consisting of individuals as directors."

The composition of the board must adhere to the following guidelines:

Public Company: A minimum of three and a maximum of fifteen directors should be appointed. Also, at least one-third of the directors must be independent directors.

Private Company: Minimum of two and a maximum of fifteen directors are required for a private company.

One Person Company (OPC): A minimum of one director must be appointed.

Note:

l  A Company may appoint more than fifteen directors after passing a special resolution.

l  Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.

Powers of Directors

Board of directors is the biggest authority of the company and is vested with the various powers under section 179 of the companies act 2013. The board of directors holds complete control over the company's operations, but must act within the limits set by the company's memorandum and articles and cannot perform acts reserved for shareholders in general meetings.

Section 179(3) of the Act provides that the Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board-

(a) to make calls on shareholders in respect of money unpaid on their shares;

(b) to authorise buy-back of securities under section 68;

(c) to issue securities, including debentures, whether in or outside India;

(d) to borrow monies;

(e) to invest the funds of the company;

(f) to grant loans or give guarantee or provide security in respect of loans;

(g) to approve financial statement and the Board‘s report;

(h) to diversify the business of the company;

(i) to approve amalgamation, merger or reconstruction;

(j) to take over a company or acquire a controlling or substantial stake in another company;

(k) any other matter which may be prescribed:

Powers to be exercised with general meeting approval

Section 180 of the Companies Act, 2013 provides certain powers which the Board of Directors of a company shall exercise only with the consent of the company by a special resolution

Ø  To sale, lease or otherwise dispose of the whole or any part of the company's undertakings;

Ø  To invest otherwise in trust securities;

Ø  To borrow money for the purpose of the company;

Ø  To give time or refrain the director from repayment of any debt.

If the director violates the restrictions imposed by this section, the title of lessee or purchaser is affected. However, if a person has acted in good faith and with due care and diligence, it remains unaffected. This section does not apply to companies whose primary business is the sale of real estate or the leasing of real estate.

Power to constitute audit committee

The board of directors has the authority to constitute the audit committee under Section 177 of the Act. It must have at least three directors, including independent directors. The chairman of the audit committee must be able to read and understand financial statements in order to be appointed. The audit committee shall function in accordance with the terms of reference specified in writing by the board.

Power to constitute nomination and remuneration committee and stakeholder relationship committee

Section 178 of the Companies Act of 2013 empowers the board of directors to form a nomination and remuneration committee as well as a stakeholders' relationship committee. In the nomination and remuneration committee, there should be three or more non executive directors, out of which half are required to be independent directors. A stakeholder relationship committee can also be formed by a board of more than 1000 shareholders, debenture holders, or other security holders. This committee is responsible for resolving the grievances of shareholders.

Power to make contribution to charitable and other funds

Section 181 of the act allows the board of directors to contribute to a genuine and bonafide cause as a charity. The only condition imposed is that if the contribution exceeds 5% of the company's net profit, permission is required to be taken in the general meeting.

Power to make a political contribution

Political contributions can be made by companies under Section 182 of the Companies Act of 2013, with exception of a government company or the company which has been in existence for less than 3 years. However companies' contributions to political parties cannot exceed 7.5% of its average net profits during the three immediately preceding financial years. Any contribution should be approved by the board of directors first.

Power to contribute to National Defence Fund

Section 183 of the Companies Act empowers directors to contribute to the National Defense Fund and any other fund established for the purpose of national defence. Any amount of contribution is acceptable; the only requirement is that the amount contributed should be disclosed in the profit and loss account of that financial year.

Duties Of Director

Section 166 of the Companies Act, 2013 defines the duties of Directors. A Director of a company should perform the following duties-

Ø  A director shall act in accordance with the articles of the company.

Ø  A director shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of the environment.

Ø  A director shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.

Ø  A director shall not be involved in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.

Ø  A director shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company.

Ø  A director shall not assign his office and any assignment so made shall be void.

If the director contravenes any provisions of this section, he shall be punishable by a fine of Rs. 1,00,000 or more, which may extend up to Rs. 5,00,000.

References:

https://blog.ipleaders.in/director-companies-under-companies-act-2013-overview/

https://www.legalserviceindia.com/legal/article-7322-who-are-directors-under-companies-act-.html

https://cleartax.in/s/types-of-directors-in-a-company