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Difference Between Director & Additional Director

Difference Between Director & Additional Director

 

Director

As per Section 2 (34) of the Act prescribed that “director” means a director appointed to the Board of a company. 

As a company is formed by its members who are the actual owners of the company but being a separate legal entity its affairs are managed by independent persons called Directors.

A company being an artificial person cannot do things on its own. For that purpose, it needs someone to do those things. Another reason for the appointment of directors to manage the affairs of the company is the separation of ownership from management. A company is formed to do business on a large scale and for that, it must be managed by persons having relevant expertise and for a single person, it is not possible to be expert in every field. 

Related Topic:
Appointment of CFO under Companies Act, 2013

Directors work according to the Memorandum of Association and Articles of Association of the Company. These two documents are prepared as per the Companies Act requirements. 

Section  149(1) of the Companies Act, 2013 prescribes the minimum & the maximum number of directors in a company:

Public Company: 3 Directors

Private Company: 2 Directors

OPC: 1 Director

A company can have a maximum of 15 directors.

Provided that a company may appoint more than 15 directors after passing a Special Resolution in the general meeting of the company.

Additional Director

Section 161(1) of the Companies Act, 2013

The articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier.

Sometimes there are situations where the Board feels that there is a need for a new director due to workload but it is not possible to conduct a General Meeting so they can appoint a new director by passing a Board Resolution as an Additional Director. At the Annual General Meeting, that director can be appointed as a company director if approved by the requisite majority of members. This process is called the Regularization of Additional directors.

Thus, as regards to the functions, responsibilities & duties there is no difference between a Director and an Additional Director. An additional Director is also counted in the minimum and maximum limit of the Number of Directors. The main difference between these two is regarding their appointment process and their term of office. A Director is appointed by the members of a company in the general meeting by passing an Ordinary Resolution whereas an additional Director is appointed by the Board by passing a Board Resolution. A director is generally appointed for a term of 5 years unless the contrary provided whereas the term of office of an additional director is up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier. 

Related Topic:
Services Provided By Director

Director Versus Additional Director

Basis Director Additional Director
Section A director is appointed as per provisions of Section 152 of the Companies Act, 2013. Section 161 contains the provisions for the appointment of an additional director.
Power to Appoint Members of a company appoint a director. An additional director is appointed by the Board of the Company.
Resolution Ordinary Resolution Board Resolution
Term of Office Generally, 5 years unless the contrary is provided. Up to the date of the Annual General Meeting or the Last date up to which AGM should have been held.

 

From the above, we can conclude that an Additional Director is a director having the same powers, responsibilities & duties as other directors. The only difference between them is regards to their appointing authority and their term of office.

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