Anyone who consents to act as an alternate director should also understand the implication of doing so.

Some points to note on alternate director:

•  An alternate director is subject to the same statutory and fiduciary duties as a director when carrying out his/her functions as an alternate.
• An alternate director has powers, rights, duties, and responsibilities only when he is acting in place of the director for whom he is an alternate.
• An alternate director does not have any powers or rights as a director when he is not called upon to act.
• No alternate director may be appointed unless the authority to appoint is provided in the Constitution.
• There is no specific provision in the Companies Act 2016 on the appointment of an alternate director.
• No shareholders’ approval is required for the appointment of an alternate director.

The definition of “director” under the Companies Act 2016 includes alternate or substitute director. An alternate director is subject to the same directors’ liabilities under the Companies Act 2016 when carrying out his/her functions as an alternate.

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This post was first posted on Linkedin on 28 May 2021.