Who can be a director of a company?
A director of a company has to be an individual who holds a Director Identification Number and is not disqualified under section 164. The Companies Act does not require a degree, and it does not require the person to hold shares unless the articles say so.
Who may be appointed?
Only an individual. A company, an LLP, a firm, or another body cannot be named as a director. The person needs a DIN before the appointment. Consent to act is Form DIR-2, taken before the appointment. A declaration that the person is not disqualified is a separate intimation. DIR-2 is not that declaration.
The members appoint a director at a general meeting, except where the Act allows the board to appoint, as with an additional director. The company’s filing is DIR-12 within 30 days. The steps are on the page for adding a director.
How many directors, and in how many companies?
Section 149 sets the board of the company.
- A private company has at least two directors. A public company has at least three. A one person company may have one.
- At least one director must have stayed in India for 182 days in the financial year.
- A company may have up to 15 directors. More than 15 needs a special resolution.
Section 165 limits the person, not the company. One individual may be a director in at most 20 companies at the same time, and in at most 10 public companies. A private company that is a holding or subsidiary of a public company counts toward the 10. A directorship in a dormant company is left out of the 20.
Who is disqualified?
Section 164(1) bars a person who, among other cases:
- is of unsound mind and has been so declared by a competent court
- is an undischarged insolvent, or has an insolvency application pending
- has been convicted of an offence and sentenced to imprisonment for at least six months, until five years have passed from the end of the sentence, and is ineligible after a sentence of seven years or more
- has been disqualified by an order of a court or the Tribunal
- has not paid calls on shares for six months
Section 164(2) is separate. A person who is or was a director of a company that has not filed financial statements or annual returns for three continuous financial years, or that has failed for a year or more to repay deposits, pay deposit interest, redeem debentures, or pay a declared dividend, is not eligible to be reappointed in that company or appointed in another company for five years.
A private company may add disqualifications in its articles. It cannot drop the ones in the Act. The 1956 Act’s section 274 is not the list in force.
Must a director hold shares?
Not under the Act. Qualification shares exist only if the articles require them. There is no statutory two-month period and no statutory rupee cap of the kind the old Act used. A digital signature is how forms are signed. It is not a qualification under section 164.
Frequently asked questions
Four questions cover a body corporate, degrees, a private-company waiver, and rotation.
Can a company or an LLP be a director?
No. Only an individual can be a director.
Does the Act require a degree or a professional qualification?
No. Section 164 does not list a degree. The articles may add a requirement. They cannot remove a disqualification in the Act.
Can a private company waive a disqualification?
No. Section 164(3) lets a private company add further disqualifications in its articles. It does not let the company ignore section 164.
Do directors of a private company retire by rotation?
Not under the Act. Rotation under section 152(6) applies to a public company. A private company follows rotation only if its articles say so.
Sources
Appointment is section 152. Disqualification is section 164. Numbers are section 149.