Can a person who is a full-time employee of one company be a full-time director of another company in India?

Updated on : December 4, 2021 by Stanley Harrison



Can a person who is a full-time employee of one company be a full-time director of another company in India?

My T,

Good question. This brings me to the concept of building your company while working for someone as an employee.

The answer is given here by Saurabh Toshniwal

If possible. A person can be a director of one company and an employee of another. There is no provision in the 2013 Companies Act that prohibits the same.

There are many people who work elsewhere and become directors of their own company. So that is possible, unless the company where you are doing the work opposes the same.

However, when the person is not the owner of the business, in such cases it is very rare for a person to

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My T,

Good question. This brings me to the concept of building your company while working for someone as an employee.

The answer is given here by Saurabh Toshniwal

If possible. A person can be a director of one company and an employee of another. There is no provision in the 2013 Companies Act that prohibits the same.

There are many people who work elsewhere and become directors of their own company. So that is possible, unless the company where you are doing the work opposes the same.

However, when the person is not the owner of the business, in such cases, it is very rare for a person who works elsewhere to be appointed as Director, except in the following situation:

  • The person is appointed by virtue of majority ownership.
  • The person is rich in goodwill and his goodwill is useful to the company.
  • The person is an independent director.
  • The person is a sleeping director / non-executive director.
  • There can be many more similar examples.

I have seen many practical cases and it is totally possible and legal too.

If possible. A person can be a director of one company and an employee of another. There is no provision in the 2013 Companies Act that prohibits the same.

There are many people who work elsewhere and become directors of their own company. So that is possible, unless the company where you are doing the work opposes the same.

However, when the person is not the owner of the business, in such cases, it is very rare for a person who works elsewhere to be appointed as Director, except in the following situation:

  • The person is appointed by virtue of majority ownership.
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If possible. A person can be a director of one company and an employee of another. There is no provision in the 2013 Companies Act that prohibits the same.

There are many people who work elsewhere and become directors of their own company. So that is possible, unless the company where you are doing the work opposes the same.

However, when the person is not the owner of the business, in such cases, it is very rare for a person who works elsewhere to be appointed as Director, except in the following situation:

  • The person is appointed by virtue of majority ownership.
  • The person is rich in goodwill and his goodwill is useful to the company.
  • The person is an independent director.
  • The person is a sleeping director / non-executive director.
  • There can be many more similar examples.

I have seen many practical cases and it is totally possible and legal too.

It depends on the service regulations of the company you work for. Normally, no employer would allow its employees to occupy any other position for profit or to be involved elsewhere. So if that restriction applies to him then forget about full time, he is not supposed to work as a director part time as well.

I am not an expert by any means, but I am doing the exact same thing. I work at an investment bank in a mid to upper level position in New York. Needless to say, it is an investment banking job and it is very stressful. My startup is a web-based product. Here is my journey so far.

I have been working for the last year and I am about to launch it. I spent around 12 months working on the startup alone, which includes business idea, market research, searching for existing competition, product feasibility, learning, coding, testing, etc. It was very difficult because I didn't know some of the technology things I was working on. but luckily I

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I am not an expert by any means, but I am doing the exact same thing. I work at an investment bank in a mid to upper level position in New York. Needless to say, it is an investment banking job and it is very stressful. My startup is a web-based product. Here is my journey so far.

I have been working for the last year and I am about to launch it. I spent around 12 months working on the startup alone, which includes business idea, market research, searching for existing competition, product feasibility, learning, coding, testing, etc. It was very difficult because I didn't know some of the technology things I was working on. but luckily I have a very good background in technology, so it helped me. Now when the product is in pretty good shape, I have 2 options: quit my job and work at my dream startup full time, or get help by paying freelancers a little. I am extremely focused on making the product a real world class product, so I never paid anyone to write code from scratch because you get what you pay for and I can't hire a Rockstar developer. So I decided to work on my own. Unfortunately, I couldn't find anyone who worked passionately as a co-founder.

Not having a co-founder has pros and cons. The benefits are not conflicts. Trust me, this is a big problem. A bad co-founder can really break your company. That happened to one of my friends who was running a very successful startup and then got a co-founder. The business failed because they had many conflicts. On the other hand, an amazing co-founder is a great asset as he fills the void you don't realize and acts as a validator for your ideas.

Since I couldn't find a decent co-founder, I took a different approach. I started looking for people with good execution skills rather than people with a great creative mind to create a business strategy. Now I created 4 roles for my startup.

1. Business Run Guy. Someone who can simply execute a business idea. For example, meeting with clients, talking to other parts of the business. I recently found a person who will work part time once the product is ready as a "kind of" co-founder.

2. Coder / Developer: I hired a freelancer to finish the remaining work.

3. Advisors: is someone who is intellectual or has worked in the same industry, teachers, etc.

4. Business Strategist: This is me.

This model is working for me and we are ready to launch in 3 months.

How I divide my time into my full-time job and my startup:

1. I code 12-15 hours a week on most of the crucial parts that I can't expose to freelancers.

2. Read lots of news and techcrunch every day in the morning.

3. Take notes almost on office coffee breaks. Even if it's a 2 minute break. Whatever comes to mind, I keep drafting it at a cloud service provider. Sharing documents smoothly really helps me a lot.

4. Write project specs, tech specs, freelance test cases whenever you have extra time. Talk to the developer at least once a week.

I plan to quit my job after some credibility is established for my startup. Once I realize that it is money that is needed to get the startup up and running, I will contact the investors and quit my job.

This has worked well for me so far. I've made a few mistakes that I realize I could have avoided, but I think it's part of learning.

Someone could argue why I don't quit my job and get involved full time. My answer is that this is how I want to do things and I have had good results so far.

Like I said, this is not an expert post and I am open to any suggestions from all the great people here. Feel free to suggest improvements.

It is not illegal, but it is a risk.

I will use myself as an example here. I work for U-Haul, the largest DIY storage and moving company in North America. I also work for a place called W-Ave Storage, a self-catering facility. And I am a co-owner of a business as a silent co-owner.

At first glance, this looks like there could be massive conflicts of interest. However, in my particular case, these conflicts do not exist. The reason is that prior to my employment at W-Ave, they already made an agreement with U-Haul to rent U-Haul trucks and trailers, and use U-Haul software to manage storage.

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It is not illegal, but it is a risk.

I will use myself as an example here. I work for U-Haul, the largest DIY storage and moving company in North America. I also work for a place called W-Ave Storage, a self-catering facility. And I am a co-owner of a business as a silent co-owner.

At first glance, this looks like there could be massive conflicts of interest. However, in my particular case, these conflicts do not exist. The reason is that prior to my employment at W-Ave, they already made an agreement with U-Haul to rent U-Haul trucks and trailers, and use U-Haul software to manage the storage units. Since U-Haul procedures are already in use at that facility, the powers vested in U-Haul's senior management of this area have decided that there is no inherent conflict of interest, although my actions are subject to scrutiny. additional to ensure that you do not act in favor of W-Ave at U-Haul's expense.

If W-Ave rented trucks from Budget or did not use U-Haul software, there would be a conflict of interest and I would have been told to choose one job and quit the other.

As for the business I am a co-owner of? It has nothing to do with the DIY moving and storage industry - it makes T-shirts, soap, and candles. Zero conflict of interest, as long as I do not start using my position in the other companies to give advantages to my business, such as free truck rentals or warehouses.

Basically, as long as your company is not a competitor and you don't use your position to the advantage of your company at the expense of your employer, things will be fine.

There can be two situations under your inquiry.

  1. A person is only a shareholder of a private company and does not hold any position or seat on the board.
  2. A person is a shareholder and holds a position in the company, either as an officer of the company or as a director of the company.

In situation 1, the stock will be considered an investment of that person, and therefore your employer elsewhere should have no problem. Furthermore, there is no law on double employment and, above all, it is contractually agreed between the parties that the employee shall not employ himself elsewhere. So in sitting

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There can be two situations under your inquiry.

  1. A person is only a shareholder of a private company and does not hold any position or seat on the board.
  2. A person is a shareholder and holds a position in the company, either as an officer of the company or as a director of the company.

In situation 1, the stock will be considered an investment of that person, and therefore your employer elsewhere should have no problem. Furthermore, there is no law on double employment and, above all, it is contractually agreed between the parties that the employee shall not employ himself elsewhere. Therefore, in situation 1, the person will be sure to be an employee elsewhere.

In situation 2, the person will face a problem, since he is an employee of the company or occupies a position on the board, which will not be to the liking of the new employer.

Furthermore, in situation 1, if the shareholder is a majority shareholder of the company, then he will have control over the decisions of the company, so, also in this situation, the employer may be uncomfortable.

In practice, I have advised people who want to start a business while on the job that make theirs closed or someone they trust as a shareholder in their business care and enjoy both.

This depends on the terms of your agreements with both companies.

For example, I was once offered a full-time job with a startup that couldn't pay me; their expectation was that I would accept recruitment jobs to pay my bills until the startup could do so.

For another example, I once worked for a large company that allowed me to accept contract jobs as long as I (1) informed them of all contracts; (2) the hiring did not interfere with my job performance; and (3) the contracts did not involve working on game or multimedia projects.

And, as a third example, I once worked for a small game.

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This depends on the terms of your agreements with both companies.

For example, I was once offered a full-time job with a startup that couldn't pay me; their expectation was that I would accept recruitment jobs to pay my bills until the startup could do so.

For another example, I once worked for a large company that allowed me to accept contract jobs as long as I (1) informed them of all contracts; (2) the hiring did not interfere with my job performance; and (3) the contracts did not involve working on game or multimedia projects.

And for a third example, I once worked for a small game studio that paid us well and made us work hard, but where about half of the staff had side jobs on other game projects as well. The practice, in my opinion, interfered with staff performance, but the CEO allowed it (and he was doing it himself).

Fourth example: an employer had a "no moonlighting" clause in the employment contract. I was expecting 100% of my productivity to be applied to your company's projects, hires are not allowed.

There are certain conditions under which it is possible for a full-time employee to be a director of another company. Director means board of directors or leadership.

It is not the Director title given to GM level roles or VP level roles in some multinational companies, it is an operational role.

Private companies that are not engaged in competitive business - same as employer is fine, but no objection authorization must be obtained from the employer.

The corporation must make the same SEBI declaration and authorization. One person can be part of up to 7 companies in a director capacity and all other factors are left up to

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There are certain conditions under which it is possible for a full-time employee to be a director of another company. Director means board of directors or leadership.

It is not the Director title given to GM level roles or VP level roles in some multinational companies, it is an operational role.

Private companies that are not engaged in competitive business - same as employer is fine, but no objection authorization must be obtained from the employer.

The corporation must make the same SEBI declaration and authorization. One person can be part of up to 7 companies in a director capacity and all other factors are left to the decision of the companies and again they should not be competitors!

The employing company will not allow full-time operational management if it is neglecting the employer's responsibilities.

Therefore, you have to take care of it, as we know that there are several types of directors and some are not considered a problem at all. We are talking about commercial, non-charitable and NGO-type companies.

Being part of a company and giving it up to start my own company, I think it is best to start yours while you are working.

Work and business can be done together in the initial stages while setting up the business. Then there comes a point where you have to quit smoking and fully focus on the business.

Not everyone is completely busy all the time at work, so you can use your free time and prepare the basics for the business, such as market research, product research, basic prototypes, etc.

A friend of mine who was earning Rs. 1,50,000 a month quit his job and started a training center that provided

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Being part of a company and giving it up to start my own company, I think it is best to start yours while you are working.

Work and business can be done together in the initial stages while setting up the business. Then there comes a point where you have to quit smoking and fully focus on the business.

Not everyone is completely busy all the time at work, so you can use your free time and prepare the basics for the business, such as market research, product research, basic prototypes, etc.

A friend of mine who was earning Rs. 1,50,000 a month quit his job and opened a training center that provides a diploma certificate. When it had the training modules ready and its business infrastructure installed, it took almost a year. Not only had he invested, but he had also missed an 18 lacs opportunity that year. When it came time to commercialize, he ran out of funds and was unable to attract people to his course. He suffered a great loss. It closed in the next 6 months.

So get the basic work done like infrastructure, business model, pre-training, basic equipment setup, etc. all done and then dig deep.

All the best!

  1. You can be a director of a company while working full time. But please check these:
    1. The agreement you may have signed when you joined the job.
    2. Any non-compete agreement. You cannot be in another company that sells the same / product or service as your current company or that sells to the same customers of your current company
  2. If you are bound by your employment agreements, start / register with your spouse's names. Later, you can add their names and delete. There are special forms (called Amendments / Change of Directors) that can be submitted.
  3. Accept payments from your customers only on behalf of the company.
  4. Anyway you will have
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  1. You can be a director of a company while working full time. But please check these:
    1. The agreement you may have signed when you joined the job.
    2. Any non-compete agreement. You cannot be in another company that sells the same / product or service as your current company or that sells to the same customers of your current company
  2. If you are bound by your employment agreements, start / register with your spouse's names. Later, you can add their names and delete. There are special forms (called Amendments / Change of Directors) that can be submitted.
  3. Accept payments from your customers only on behalf of the company.
  4. Anyway you will have to register through a Public Accountant, they will help you. Before that, if you have a CA in your family, friends talk to them first.

Good luck .

Sure, you can be a director on the board of more than one company, even worldwide, at any time. This is not an academic question, as many full-time directors multitask in many organizations. Nevertheless,

  • You will continue to have fiduciary responsibility to each company and will protect yourself against conflicts of interest.
  • You will need to disclose this to each of the boards you serve and to the respective regulatory bodies.

Being an employee of a company and being a shareholder of the same company are two different things and you can have them at the same time. If you are an employee and shareholder and you leave your job because you quit or are fired, you will remain an employee.

A common exception to this is if you received free or specially priced shares as part of your compensation package. If so, there are likely to be special terms that explain under what conditions you keep or lose them if your employment ends.

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