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Minimum/Maximum Number of Directors in a Company

Section 149(1) of the Companies Act, 2013 requires that every company shall have a minimum number of 3 directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company.

A company can appoint maximum 15 fifteen directors without any specific compliance. A company may appoint more than fifteen directors after passing a special resolution in general meeting. The restriction of maximum number of directors shall not apply to section 8 companies.

Private Company – 2 directors

One Person Company (OPC) – 1 Director

Minimum number of directors Public Company – 3 Directors

Maximum Number of Director is 15, which can be increased by passing a special resolution. Section 8 companies can have more than 15 directors. Section 149(3) provides that every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year. Further, Second proviso to Section 149(1) read Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014 some class of companies must have at least one Women Director.

Maximum number of directorships, including any alternate directorship, a person can hold is 20. Same time, a person cannot be a director of more than 10 public companies. For the purpose of counting such directorship in public company, directorship in private companies that are either holding or subsidiary of a public company shall be included. Alternate directorship shall also be included while calculating the directorship of 20 companies. Section 8 company will not be counted for the purpose of maximum number of Directorship.

Further the members of a company may restrict above mentioned limit by passing a special resolution for its own directors. For reckoning the limit of directorships of twenty companies, the directorship in a dormant company shall not be included. If a person accepts an appointment as a director in contravention of above mentioned provisions, he shall be punishable with fine which shall not be less than five thousand rupees but which may extend to twenty five thousand rupees for every day after the first day during which the contravention continues.

Additionally for listed entities SEBI vide recent notification provides that the board of directors of the top 1000 listed entities (with effect from April 1, 2019) and the top 2000 listed entities (with effect from April 1, 2020) shall comprise of not less than six directors. Explanation: The top 1000 and 2000 entities shall be determined on the basis of market capitalization as at the end of the immediate previous financial year.

No listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person. With effect from April 1, 2020, the top 500 listed entities shall ensure that the Chairperson of the board of such listed entity shall – (a) be a non-executive director; (b) not be related to the Managing Director or the Chief Executive Officer as per the definition of the term “relative” defined under the Companies Act, 2013: Further it is provided that this sub-regulation shall not be applicable to the listed entities which do not have any identifiable promoters as per the shareholding pattern filed with stock exchanges.

Author

Gayatri Dhote

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