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Justify the following statement: A Director cannot be called employee of the company.

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Question

Justify the following statement:

A Director cannot be called an employee of the company.

Short/Brief Note
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Solution

(a) The directors are the elected representatives of the shareholders entrusted with well-defined powers and rights. The directors are not the employees of the company because they are only required to attend the Board meeting and set out the general policy of the company.

(b) The full-time officers like a manager, company secretary, etc. are employees appointed to carry out day-to-day activities of the company management. A director can be entitled to a share in the profit of a company including a handsome salary. Thus, a director of a company is a managing partner, trustee, and agent but cannot be regarded as employees of the company.

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Key Managerial Personnel (KMP)
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Chapter 6: Directors and Key Managerial personnel of a company - EXERCISES [Page 101]

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Balbharati Secretarial Practice [English] 11 Standard Maharashtra State Board
Chapter 6 Directors and Key Managerial personnel of a company
EXERCISES | Q 6. 8) | Page 101

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