Directors, being the controlling mind of a company, are in charge of its governance and management. While some directors are employed by the company whole time, others contribute their experience and reach in an unassertive supervisory capacity. Non-executive directors fall in the latter category.
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The term non-executive director is not defined under the Companies Act, 2013, or the rules under it. However, simply put, a non-executive director is one who is not employed whole time by the company.
The Supreme Court in Pooja Ravinder Devidasani v State of Maharashtra iterated this view: “Non-executive director is no doubt a custodian of the governance of the company but does not involve in the day-to-day affairs of the running of its business and only monitors the executive activity.” Therefore, the role of a non-executive director needs to be construed keeping in mind the types of directors in a company vis-à-vis their role in its functioning.
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Bhumesh Verma is a partner and Anandini Kumar is an associate at Link Legal India Law Services.
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