In companies two types of people are required at the time of registration of company or during the tenure of company one is the director and the other is member. Generally, the member is the director in a private limited company, one person company or any other company but it is not necessary that the member should be the director in a 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:
|
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: | In case of:
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Maximum limit in the company | In case of:
| In case of:
|
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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