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Home Business Board of directors: The types you need to be aware off!

Board of directors: The types you need to be aware off!

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The Board of directors plays a crucial role in any company. If you own a private company, it is important to understand the role played by each director. For the company to be functional and in harmony, the board of directors should work in peace. Also, they need to be aware of their roles and responsibilities.

With this being said, let’s learn more about the different types of directors in a private limited company.

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1- Executive Director

The most commonly known kind would be the “Executive Directors”. These are full-time professionals, who work to build and manage the company. They need to handle employees and ensure that all processes are in place. The executive director will give direct reports to the stakeholders.

When anything goes wrong (or well), the executive directors are fully responsible.

2- Non-Executive Directors

Unlike the executive board of directors, the non-executive ones are not involved in daily activities. But, they play an integral role in planning activities. Most of the time, organizations need a non-executive board of directors for building policies. These professionals are expected to challenge the active executive directors. They need to come up with plans and policies that would be in the best interest of the business.

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3- Managing Directors

Managing Directors

Another common member of the board of directors would be the “Managing Directors”. These professionals have substantial power to make decisions. They have the authority to manage other members of the company. Any company with a share capital needs a managing director.

4- Independent Directors

As suggested by its name, these members are not directly related to the company. They gain importance for their assets and knowledge. Many a time, you will come across independent directors with decades of experience. And, their notions would be valued the most. This is because they “work and speak” towards the growth of companies.

For a board of directors to be categorized as independent contributors, the following conditions need to be fulfilled:

  • They must have adequate expertise in the industry.
  • They should be of great integrity.
  • They must not promote the company through any means.
  • They must not be related to the managing director or executive directors.
  • They must not be “primary” decision-makers of the company.

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5- Alternate Directors

Alternate directors become effective if the “primary” board of directors is absent for three or more months. They serve for a temporary period of time. And, the alternate board of directors can work from the “same” office as the directors.

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