Can a salaried person be a director in a company?
Yes, a salaried person can become a Director in a company, but there are some legal and contractual points to keep in mind:
Types of Directors a Salaried Person Can Become
Executive Director (Whole-Time Director) – If the salaried person wants to be actively involved in the company’s operations, they must resign from their existing employment (unless their employer permits it).
Non-Executive Director (Independent Director) – If the person only provides strategic guidance and is not involved in daily operations, they may take up this role while employed elsewhere.
Nominee Director – If appointed by an investor, bank, or government body, they may serve in a limited capacity while still being employed elsewhere.
Key Considerations Before Becoming a Director
Check Employment Terms & Conditions
Many employment agreements contain a non-compete clause or a conflict of interest clause that may restrict an employee from becoming a Director in another company.
Take the Company’s Approval (if needed)
If the salaried person is in a government job, prior permission is mandatory before taking up a Director role in any private company. If they work in a private company, they must check their employment agreement for any restrictions.
Legal Compliance Under the Companies Act, 2013
A person must meet the eligibility criteria under the Companies Act, 2013. He must obtain a Director Identification Number (DIN) and comply with other statutory requirements.
Conclusion
A salaried person can become a Director, but they must check their employment agreement, get necessary approvals, and comply with the law. If they want to be an Executive Director, they may need to resign from their current job.
Are You Looking for Director Appointment Services?
We at Bizindigo, offer expert Appointment of Director Services to help the company navigate the complexities of appointing directors. We ensure 100% compliance with applicable company laws. Whether you are a salaried individual seeking to step into a directorial role or a company needing expert guidance on the appointment process, we are here to support you every step of the way.
Our Services Include:
- Expert guidance on the appointment process
- Digital Signature & DIN application
- Drafting of Board Resolution
- Preparation of Director Consent Letter (DIR-2)
- Filing Application for an appointment with MCA (DIR-12)
- Director Annual KYC (DIR-3 KYC)