Brief note on holding Directorship – Companies Act, 2013

As per Section 165(1) of Companies Act, 2013

No person shall hold office as a director, including any alternate directorship, in more than 20 Companies at the same time.

Provided that the maximum number of public companies in which a person can be appointed as a director shall not exceed 10.

Points to be consider:

• For reckoning the limit of public companies in which a person can be appointed as director, directorship in private companies that are either holding or subsidiary company of a public company shall be included.
• For reckoning the limit of directorships of 20 companies, the directorship in a dormant company shall not be included.

In case of contravention:

• If a person accepts an appointment as a director in contravention of the above provision he shall be liable to a penalty of five thousand rupees for each day after the first during which such contravention continues. (As per section 165(6) of the Companies Act, 2013)
• Not complying with above provision a person shall not be eligible for appointment as a director of a Company and the office of a director shall become vacant. (Newly inserted clause (i) in section 164(1) Read with clause (a) section 167(1) of Companies Act, 2013) 

As per Regulation 17A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Points to be consider:

• A person shall not be a director in more than 8 listed entities with effect from April 1, 2019.
• A person shall not serve as an independent director in more than 7 listed entities.
• Any person who is serving as a WTD / MD in any listed entity shall serve as an independent director in not more than 3 listed entities.

*For reckoning the limit of public companies in which a person can be appointed as director, directorship in private companies that are either holding or subsidiary company of a public company shall be included.

** Any person who is serving as a WTD / MD in any listed Company.

In case of contravention of Companies Act, 2013:

• If a person accepts an appointment as a director in contravention of the above provision he shall be liable to a penalty of five thousand rupees for each day after the first during which such contravention continues. (Newly inserted section 165(6) of the Companies Act, 2013)
• Not complying with above provision a person shall not be eligible for appointment as a director of a Company and the office of a director shall become vacant. (Newly inserted clause (i) in section 164(1) Read with clause (a) section 167(1) of Companies Act, 2013)