81. Non executive Director

The Companies Act, 1956 does not distinguishing directors as executive and non executive. The directors are collectively controlling the Company. Some of them actively participate in the day-to-day affairs of the Company. But, some others concentrate on the policy decisions and overall growth of the Company only. Their participation limited to and ends with attending Board Meetings. Over a period, this brought the distinction as executive directors and non-executive directors.

Directors who are the employees of the Company or who are entrusted with day-to-day operations of the Company are called executive directors. Managing Director, Whole-time Director are executive directors. Other directors, who are from outside Company are non-executive directors. They not employees of the Company and they receives only sitting fee from the Company in which they are directors. They only attend the meetings of Board and committees thereof.

Normally, the following tasks are expected from non-executive directors: ·         Monitoring performance of the Company; ·         Rendering professional guidance in respective fields of experience; ·         Provide impartial and independent advice to the Board; ·         To keep moral pressure and a watching eye on executive directors; ·         To prevent misuse of the authority by executive directors; ·         Keep a balance between interests of the Company, members, employees, and directors .

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There is no distinction between whole-time or part time directors or appointed or nominated Director and liability for acts of omission or commission is equal, so also the treatment for such violations as stipulated in the Act. The Director is bound to discharge the functions of a Director and should take all diligent steps and care in affairs of the Company. Madhavan Nambiar v. Registrar of Companies, 2002