Composition of board of directors of a company a company is a legal entity which does not have a physical existence and it and it exists in eyes of law it is not have a soul or a body of and it cannot act as a person so only through human agency. The person who is charge of the management of the company are called directors. They are collectively called as board of directors or the board. The directors are the brainchild of the company. They play a vital role in formation and functioning of the company. They also conduct the meetings and committees for the company.
Minimum and maximum number of directors in the company according to section 149 of the Companies Act 2013
- Section 149 of the companies act 2013, mandates that a company should have minimum of 3 directors in case of a public company, 2 in case of a private company and 1 in case of a one person company.
- A person can appoint maximum of 15 directors for a company. and later on more also if it wants to by passing a special resolution in general meeting and thereafter approval of central government is not required.
- The maximum number of directorship a company can appoint including alternate directors is 20.
- Under a public or private company in case of subsidiary, the subsidiary can hold directorship of maximum 10.
- Every company shall appoint 1 director who has stayed in India for a period of 182 days at minimum.
- At least one woman director shall be appointed by the company.
- All the listed companies would have at least one third of total number od directors as independent directors.
Under LODR for listed companies
Board of directors
- The composition of board of directors shall have optimum combination of executive and non- executive directors with at least one woman director and not less than 50% of BOD shall comprise of non- executive directors.
- In case the chairperson is a non- executive director for the company, one third of the board of directors shall comprise of independent directors. In case, the chairperson is not a regular non- executive director, then fifty percent of board of directors shall be independent directors.
- However where the non- executive chairperson is a promoter or related to promoter or any person a t managerial level at board of directors or one level below, then half of the board of directors shall be independent directors in the company.
Audit Committee
- The listed entity shall constitute an independent audit committee
- It shall consist of minimum 3 directors as members
- Two thirds of the members of audit committee shall be independent directors.
- At least one accounting or related financial management expertise and all members to have financial literacy.
- Independent director to be the chairperson for the audit committee and he shall represent audit committee in annual general meeting of the company and answer audit related queries of the shareholders.
- The company secretary to act as secretary of the audit committee.
- Finance director shall be invited at discretion of audit committee, head of internal audit committee and a representative of statutory auditor and any other executive to be present at committee meetings such that audit committee may meet without presence of any executives of listed companies.
Nomination and remuneration committee
- Committee to comprise of at least 3 directors
- All the directors to be non- executive directors.
- 50% of directors to be independent directors.
- The independent director shall be the chairperson for the committee.
Stakeholders’ relationship committee
- To look for grievance redressal for shareholders, debenture holders and security holders the listed entity shall constitute this committee.
- The chairperson shall be a non- executive director.
Risk management committee
- The majority members of this committee shall be board of directors.
Summary:
Board of directors form major part of the company, they help in formation of the company, there can be non- executive members, independent directors, etc. there are various committees in a company which have different directors. Company vakil is a leading legal registration platform to help you get your company up and running.
