According to Section 2(34) of the Companies Act, 2013 a director is director who is appointed to the Board of the company.
According to Section 2(10) of the Companies Act, 2013 Board or Board of Directors in the company means the altogether body of the directors of the company.
According to Section 149 of the Companies Act, 2013 the Board of Directors of each company shall comprise of only individuals. That means, body corporate, firm or association shall not be appointed as a director.
MINIMUM AND MAXIMUM NUMBER OF DIRECTORS
Section 149(1) of the Companies Act, 2013 states minimum and maximum number of the directors in a company. The minimum number of director in a private limited company is 2, for public company it is 3 directors and an OPC shall have minimum 1 director. However, maximum number of directors in a company is 15. The company can raise the number of directors beyond 15, by passing a special resolution in the general meeting.
DIRECTORSHIPS OF AN INDIVIDUAL
The provision of Directorship of an Individual is specified under Section 165 of the Companies Act, 2013 which is as follows:
- An individual can be a Director in 20 companies that includes alternate directorships.
- An individual cannot be a Director in more than 10 public limited companies.
- If the company wants to lessen the number of the Directorship for directors, the company can do so by passing a special resolution.
- Such person shall not act as a Director in more than the specified number of companies after dispatching the resignation or after the expiry of this Act, whichever is earlier.
- If a person is a director of the private company which is subsidiary or holding company of a public limited company then the director will be considered as a director of a public limited company.
- The directorship in dormant company or Section 8 Company will be excluded For calculation of the limit of directorship of twenty companies.
- If any director contravenes the provision of Section 165 of the Companies Act, 2013 then he will be punishable with the fine of Rs. 2,000 for each day during which, such default continues, subject to a maximum of Rs 2 lakhs.
- Furthermore, directorship in listed entities, listed entities shall make sure that no person is a director in more than eight listed entities with effect from 1 April 2019 and not in more than eight listed entities with effect from 1 April 2020.
However, the director shall not act as independent director in more than seven listed entities.
If a director is a whole time director or managing director in any listed entities he shall serve as an independent director in not more than three listed entities. The estimation for the number of listed entities on which a person is a director or independent director shall be only whose equity shares are listed on stock exchange.
As per Regulation 17 of Securities and Exchange of India (Listing Obligations and Disclosure Requirement) 2015 the composition of Board of Directors in a listed company is as follows:
- Board of directors shall have a combination of executive and non-executive directors with at least one woman director and not less than fifty per cent of the board of directors shall constitute of non-executive directors.
- If the chairperson of the board of directors is a non-executive director, then at least one-third of the board of directors shall constitute of independent directors and if the listed entity has an executive chairperson, then at least half of the board of directors shall comprise of independent directors.
Tags corporate law