Meaning of Director - Companies Act 1956

Meaning of Director

As per section 2(13) of the Companies Act 1956, Directors includes any person occupying the position of Directors by whatever name called. The definition of Director is inclusive definition. It includes any person who occupies the position of a Director is known as Director whether or not designated as Director. It is not the name by which a person is called but position he occupies and the functions and duties which he discharges that determines whether he is a Director or not. Simply, Director means a person who controls or supervises the affairs of business. Therefore, the Director is liable for every act which he control.

He is duly appointed by the Company through Articles of Association or in general meeting, to control the business of the Company and authorised by Articles of Association to contract on behalf of the Company. A Director is a person charged with the conduct and management of the company’s activities. Under Companies Act, Directors are the primary agent of the Company to transact its business. He has to exercise strategic oversight over business operations while directly measuring and rewarding management’s performance. Simultaneously he has to ensure compliance with the legal framework, integrity of financial accounting and reporting systems and credibility in the eyes of the stakeholders through proper and timely disclosures.

Legal position of Director:

It is difficult to define the exact legal position of the Directors of a Company. The companies act does not define the actual position of Directors. The Director shall act as a agent or trustee or managing partner in the Company. In agency term, the Director acts on behalf of the Company. So the Company is liable for contracts executed by Director. Director also acts as a trustee. He stands in a fiduciary position towards the company in respect of his powers and capital under his control. There exists a relationship of a trustee and trust between the directors and the shareholders of the Company. The directors have been held trustees of the assets of the Company and in many cases the courts have directed them to reimburse the loss to the Company, where it was found that directors have applied the Company’s money for personal purpose or undue advantage. He shall exercise his powers in the interest of the Company. The Directors enjoys the vast power of management and acts as a decision making body.

Powers of Director

Director has no power to act on behalf of the company in any matter, except to the extent to which any power or powers of the Board have been delegated to him by the Board, within the limits prescribed under the Companies Act or any other law or memorandum and articles of association of the Company.

Rights of Director
As specified in the Secretarial Standards applicable under Companies Act 2013,

• A Director is entitled to inspect the Minutes of a Meeting held before the period of his Directorship.

• A Director is entitled to inspect the Minutes of the Meetings held during the period of his Directorship, even after he ceases to be a Director.