Question

Boards of directors consist of different types of directors such as Executive and Non- Executive directors. Describe the different types of directors, highlighting the differences between the different types, roles and rationale for each type.

Answer 1

Ques- Executives allude to the piece of the aggregate body known as the Board of Directors, that is answerable for controlling, overseeing and coordinating the issues of an organization. Chiefs are viewed as the trustees of organization's property and cash, and they likewise go about as the specialists in exchanges which are gone into by them for the organization.

Chiefs are relied upon to play out their obligations and commitments as a judiciously persevering individual with expertise, information, and experience as the individual completing elements of an executive and of that himself. Thus, an executive assumes a few jobs in an organization, as an operator, as a worker, as an official and as a trustee of the organization.

Executives are answerable for controlling, overseeing and coordinating the issues of an organization. He/She assumes numerous jobs in the organization.

The law necessitates that each organization must have at any rate 3 chiefs if there should be an occurrence of open constrained organizations, least 2 executives if there should be an occurrence of private restricted organizations and least 1 chief in the event of one individual organizations. An organization can have most extreme 15 executives. The organization could select more chiefs by passing the extraordinary goals in its comprehensive gathering.

Kinds of Directors

Private Director: according to the law, each organization needs to designate a chief who has been in India and remained for at the very least 182 days in a past schedule year.

Autonomous Director: Independent chiefs are non-official executives of an organization and help the organization to improve corporate believability and upgrade the administration guidelines. At the end of the day, a free chief is a non-official executive without a relationship with an organization which may impact the autonomy of his judgment.

The residency of the Independent executives the corridor up to 5 successive years; be that as it may, they will be qualified for reappointment by passing an extraordinary goals with the exposure in the Board's report.

Little Shareholders Directors: A recorded organization, could upon the notification of least 1000 little investors or 10% of the complete number of the little investor, whichever is lower, will have an executive which would be chosen by little investors.

Woman Director: An organization, regardless of whether be it a privately owned business or an open organization, would be required to select least one lady chief on the off chance that it fulfills any of the accompanying models: The organization is a recorded organization and its protections are recorded on the stock trade.

Extra Director: An individual could be delegated as an extra executive and can possess his post until next Annual General Meeting. Without the AGM, such term would close on the date on which such AGM ought to have been held.

Exchange Director: Alternate executive alludes to a work force designated by the Board, to fill in for a chief who may be missing from the nation, for over 3 months.

Candidate Directors: Nominee executives could be delegated by a particular class of investors, banks or loaning budgetary organizations, outsiders through agreements, or by Union Government in the event of abuse or bungle.

Liabilities of a chief

The risk of a chief emerges due to his situation as officials or operators of the Company and furthermore for being the trustees and having a guardian relationship with Company and its investors. Since an organization and its Director are two separate substances, a Director doesn't have individual liabilities in the interest of an organization. However, under specific situations (referenced beneath), a Director may be held subject:

Obligation for Tax: Under the Indian Income Tax Act, where there's expense due from any privately owned business regarding a salary of any earlier year which isn't recouped from the privately owned business, each executive of such organization during the significant past monetary year is at risk, severally and mutually, for installment of such duty.

Misquote in organization's outline: Civil risk could be forced on the chiefs for any bogus articulation in organization's plan in the event that he was the Director while giving of the plan, except if:

- The chief demonstrates that he pulled back his assent before outline was given, or

- That the outline was given without his assent or authority or without his insight, or

- He demonstrates that he accepted the questioned proclamations to be valid.

Obligations of the Company: Usually, a chief isn't at risk actually for any of the obligation of an organization until and except if extortion on some portion of Director could be built up.

Deceitful Business Conduct: A Director may be held subject by and by, for obligations or different liabilities of an organization in the event that he was intentionally a gathering to the fraud(s) while carrying on the business.

The lifting of the corporate cloak: The lifting of corporate cloak alludes to ignoring corporate character and taking a gander at the people (executives) who are controlling the organization. In straightforward words, where a lawful substance is utilized for unscrupulous and fake purposes, the people concerned can't take cover under the shroud of corporate character.

The court would get through this corporate cover. When this corporate shroud is lifted, it's allowed to show that people holing up behind the organization are at risk for releasing their commitments ignoring the idea of the organization as a lawful element.