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General question

Pallavi KS (NA) (24 Points)

25 March 2013

Hi,

Can someone clear my doubt..

Can a employee of a company become a director of another company?

Regards,

Pallavi

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ARUNKUMAR (Student CA Final ) (35 Points)
Replied 25 March 2013

Yes, there are no provisions in the companies act which restrict such scenerio..So an employee of a company can become director of another company.Qualification and disqualification of directors are stated in the companies act.Now to become a director the companies act does not prescribe any educational or other qualification for appointment.He must be an individual and should hold Director Identification Number(DIN).But however disqualifications are contained in sec 274 of companies act.The grounds for disqualification are unsound mind, undischarged insolvent, applied to be adjudged as insolvent, convicted by court,unpaid call money in respect of shares held by him and he is a director of some other public company and that public company has not filed annual accounts and annual returns for 3 continuouns years or failed to repay deposits, redeem debentures on due date or pay dividend.Hence only these criteria are set for disqualification.Hence the person who is in employment can become director of some other comany provided he applies and holds a DIN and fulfills conditions set in the articles of the other company where he is proposes to be appointed as a director if any.

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