The Companies Act does not provide any qualifications for the directors. However, specific qualifications can be stipulated in the articles of association of a company for the appointment of various directors. The specified share qualification of the directors is however limited by the Companies Act, which can be prescribed by a company to be five thousand rupees.
In some cases, the articles of association of the company impose some shareholding qualifications, which must be complied with to become eligible for the nomination as a director.
Directors having special expertise and experience in various fields constitute to form the board of directors. The main objective here is a balanced management and smooth functioning of the board of directors.
The board of directors has the following two primary objectives −
● To provide support for the management with good corporate governance.
● To formulate business strategies to achieve various business goals.
A director having a professional and ethical mind should have knowledge and experience in specific fields. With a commitment to create long term values and commitment to the shareholders, a director should fully understand his obligations and practices.
● Enough time should be given to the director to perform his duties effectively.
● A director should be able to judge himself and inform the board if he faces any hindrances or obstructions in the course of his work.
The chairman of the board of directors, beyond the duties mentioned above, must fulfill the following responsibilities −
● To act as the chairman of the board in the board of directors’ meetings.
● To exercise a casting vote in case of tie in the directors’ meeting.
● To call for the meetings of the board of directors.
● To preside over the shareholders’ meetings.
The qualifications of the chairman are slightly different from the qualifications of directors as follows −
● The chairman must not be an executive director.
● The chairman must not be involved in day to day management.
● The chairman must not be an auditor.
● The chairman must not be a legal consultant.
● The chairman must not be an employee of the company.
● The chairman must not be a staff of the company.
● The chairman must not be an advisor of the company.
● The chairman must not be a person controlling power of the company.
● The chairman must not be a person controlling power of the associated company.
● The chairman must not be a person controlling power of the auditing company.
● The chairman must not be a person who may have conflict of interest.