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Archit Jain (Practicing CA)     06 April 2009


is it neccecary for a director of a company to be a shareholder???

 7 Replies

Ajay Mishra

Ajay Mishra (Company Secretary)     06 April 2009

Dear Archit

It is not necessary for a director to become a shareholder of the company.


Gargi Ranade

Gargi Ranade (CS)     06 April 2009

Please correct me if I am wrong !

As per my knowledge it is not required that director of the company must be a shareholder of the Comapny ,technically it is correct as director is representative of shareholder but he need not required to hold any shares if Article is silent about Qualification shares ,

I have incorporated two Companies but both the time directors were not the shareholder of the Comapny ,Comapny in which I am working ,not singal Director posses  any share



Ankur Garg

Ankur Garg (Company Secretary and Compliance Officer)     06 April 2009

Dear Ajay & Gargi,

You guys are absolutely right. To add further i would say if articles of a company requires a director to hold shares then it would be redundent as desired by section-9. There is nothing in the act which require a director to hold shares in the company.

Section-9 of the act says that anything in the Memorandum or Articles beyond the Companies Act, 1956 will be Void.

But at the same time provision for qualification share through Articles is very much valid because it is specifically allowed by section-270 and not in contradiction with companies act in any way. 

Archit Jain

Archit Jain (Practicing CA)     07 April 2009

thxx a lot u all...



kinnary (student)     07 April 2009

but what abt the condition of holdin qualification shares......we know that d day d director doesnt hold qualification shares then he shud vacate office???

Ankur Garg

Ankur Garg (Company Secretary and Compliance Officer)     07 April 2009


What we all are saying is that generally it is not necessary for a dir to hold shares of a company. But if Articles of a Co. asked for qualification share u/s 270 then it is necessary for a dir to hold Q.S. u/s 270 failing which he will have to vacate his office u/s 283(1)(a).

Regards Ankur



HARDIK (COMPANY SECRETARY NCFM (Corporate Governance ))     10 April 2009


I agree with the answer of Ankur that if articles provied then director have to take qualification shares otherwise not.


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