Difference Between Director And Member

difference between directors and members in company

In companies two types of people are required at the time of registration of company or during the tenure of company one is director and member. Generally, the member is the director in a private limited company, one person company but it is not necessary that the member will be the director in the company. There is a huge difference between member and the director:

Particular Director Member / Shareholders

Meaning

Director is the person who manages the business and management of the company

Member is the person who invests the money in the company in form of share capital

Definition Under Companies Act

As per section 2(34) of the companies act a director means a director appointed by the board of directors of the company

As per section 2(55) of the act, a member means:

  • The subscriber to the memorandum of the company who shall be deemed to have agreed to become a member of the company, and on its registration, shall be entered as a member in its register of members
  • Every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company
  • Every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository

Who can be director & member

Only an individual can be the director of the company

Any person can be a member of the company.

Any person means company/ LLP/ Society/ Government and Government bodies/ any other artificial person or entity

Minimum limit in the company

In case of:

  • Private limited company: 2
  • One person company: 1
  • Nidhi limited company: 7
  • Public limited company: 7

Maximum limit in the company

In case of:

  • Private limited company: 15
  • One person company: 15
  • Nidhi limited Company: 15
  • Public Limited company: 15

In case of:

  • Private limited company: 200
  • One person company: 1
  • Nidhi limited Company: No limit
  • Public Limited company: No limit

Position

They act as a manager of the company and act on behalf of the members of the company

They are the owner of the company

Authority

Authority to manage the operation of the company and look into day-to-day work

Don’t take part in day-to-day work, they can come to the AGM and approve the balance sheet and other annual reports of the company, they can inspect the documents of the company like minutes etc.

Appointment

Generally, directors are appointed by the members of the company but if any director is appointed by the board of directors, then in the next general meeting the same should be approved by the members of the company

There is no procedure to appoint members, holding the shares of the company even a single share makes a person member of the company

Transferability of right

The director of the company cannot transfer his/her right to any other person

The member of the company can transfer his/her right by transferring his/her shares to any other person

Power

The director has the power to sign the documents, enter into the agreement or file documents on behalf of the company

The members cannot sign the documents or enter into any agreement on behalf of the company until a special power is provided to him/her. But they have the power to appoint or remove any director of the company

Liability

The directors are liable for non-compliance or any default that occurred during the tenure of the company, therefore company and director both may have to pay a fine in case of any default

The members are not liable for any penal provision of any default that happened in the company. They are liable to pay only the unpaid amount of their capital

Remuneration

The directors are entitled to get remuneration and sitting fees as prescribed under the companies act, 2013

The members are entitled to get only dividend when company declared by the company

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