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Qualification as a Director

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Shubham Deshpande

49 Points Posted on 12 July 2021

Can duly elected Sarpanch (Mukhiya) of Village become director in a company .?
Please explain with relevant provision .

Replies (8)

Quick Summary

This discussion clarifies whether an elected Sarpanch (Mukhiya) can serve as a director in a company. Generally, they can, provided they meet the eligibility criteria and aren't disqualified under Section 164 of the Companies Act, 2013. However, it's crucial to also check individual state panchayat rules, as these may impose additional restrictions, particularly for government employees or those in public service roles.

Deepa B

Practicing Chartered Accountant

573 Points Posted on 13 July 2021

Yes. He can become a director in a company provided he meets the eligibility criterions stated in section 164 of The Companies Act, 2013 and not covered under disqualifications stated in the said section. Because being an elected representative doesn't count as a criteria for disqualification as per the Act.

i am Kashif

372 Points Posted on 14 July 2021

Deepa B section 164 is disqualification of directors

Deepa B

Practicing Chartered Accountant

573 Points Posted on 14 July 2021

Agreed. Having said that if we look at Section 164(1) it starts with "A person shall not be eligible for appointment as a director of a company, if-". Hence I believe it's a reasonable interpretation to assume that it lists out the eligibility criterions in a negative way. But while doing one has to be aware that the said list in itself, is not exhaustive in nature.

Shubham Deshpande

49 Points Posted on 15 July 2021

My concern is like , government employees at the time of employment can not do the business or do the job anywhere else , so is it applicable to Sarpanch(Mukhiya) of the village?

i am Kashif

372 Points Posted on 15 July 2021

Deepa B correct apologize

Deepa B

Practicing Chartered Accountant

573 Points Posted on 15 July 2021

Every state has different panchayat rules. One has to check in the respective state panchayat rules, the provisions related to disqualification of a member to arrive at a proper conclusion. Our opinions were purely from the perspective of the Companies Act 2013.

Not 100% sure on this. But I believe a full time government employee can become only a non-executive director. And also he might not be allowed to be a director in a company in which government has a stake of 25% or more.