Summary: The comprehensive guide to directors outlines crucial provisions and regulations for corporate governance. Private companies must have at least 2 directors, public companies 3, and One Person Companies (OPCs) 1, while top 2000 listed companies require a minimum of 6 directors. The maximum number of directors allowed is 15, with potential for increase via a special resolution. A person can serve on up to 20 company boards, including a maximum of 10 public companies. Directors in listed companies face further restrictions, with a maximum of 7 directorships and independent directors limited to serving in no more than 3 listed companies. Gender diversity is mandated, requiring at least one woman director on listed companies’ boards and one independent woman director for top 1000 listed companies or certain public companies. Independent director requirements vary based on the chairperson’s role and relationship with promoters. Directors aged 75 or older need special resolution approval to serve, and every company must have at least one director who has resided in India for at least 182 days in the past year. Other provisions include the appointment of directors representing small shareholders and the nomination of directors by financial institutions or government bodies. Key compliance forms include DIR-2 for consent, DIR-3 for DIN application, and DIR-12 for appointment or resignation of directors.
DIRECTORS: KEY PROVISIONS AND REGULATIONS
1. Minimum Number of Directors:
- Private Company shall have minimum of 2 directors.
- Public Company shall have minimum of 3 directors.
- One Person Company (OPC) shall have Minimum of 1 director.
- The top 2000 listed companies must have a minimum of 6 directors.
2. Maximum Number of Directors:
- A company can have a maximum of 15 directors, which can be increased by passing a special resolution in a general meeting.
3. Limit on Directorships:
- A person can serve as a director in a maximum of 20 companies, subject of 10 public companies.
- The company may set a lower limit on the number of directorships a person can hold by passing a special resolution.
- For the purpose of 20 companies directorship in section 8 company & dormant company shall not be counted
4. Directorship in Listed Companies:
- A person can serve as a director in a maximum of 7 listed companies.
- A Whole-time Director (WTD) or Managing Director (MD) of a listed company cannot serve as an Independent Director in more than 3 listed companies.
5. Women Directors:
- Every listed company must have at least 1 woman director.
- The top 1000 listed companies must have at least one independent woman director.
- Public Companies that meet any of the following criteria:
i. Public companies with a paid-up share capital of ₹100 crore or more.
ii. Public companies with a turnover of ₹300 crore or more.
- Any casual vacancy in the women director shall be filled by the board of directors within 3 months or next board meeting (whichever is later)
6. Independent Directors Requirement:
- If the Chairperson is a Non-Executive Director, at least 33% of the board must be Independent Directors.
- If the Chairperson is an Executive Director, at least 50% of the board must be Independent Directors.
- If the Chairperson is a Non-Executive Director and is a promoter, related to a promoter, or holds a management position or is one level below management, at least 50% of the board must be Independent Directors.
- Listed companies with outstanding superior voting rights shares must have at least 50% Independent Directors on their board
7. Age Limit for Directors:
- No person aged 75 years or more can serve as a director of a company unless a special resolution is passed in the general meeting of the company.
8. Other points:
- Every company must have at least one director who has resided in India for a minimum of 182 days in the previous calendar year.
- Listed companies may appoint a director representing small shareholders upon the request of either 1000 small shareholders or 1/10th of the total number of small shareholders, whichever is less.
- A small shareholder is defined as a person holding shares of a nominal value (face value) not exceeding ₹20,000.
- The Board of Directors can appoint a director to hold office until the next general meeting which shall be regularized by the shareholders of the company in the annual general meeting of the company.
- Financial institutions, the Central Government, or State Governments may nominate a person to serve as a nominee director.
- Under Section 242 of the Companies Act (relating to relief for oppression and mismanagement), the Tribunal may appoint a director for the company.
- A director can be removed by an ordinary resolution passed in the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM).
- Independent directors can only be appointed or removed by a special resolution.
> FORMS RELATED TO DIRECTORS:
1. DIR-2: Consent to act as a director of the company.
2. DIR-3: Application for obtaining a Director Identification Number (DIN).
3. DIR-5: Application for Surrender of DIN
4. DIR-6: Application for changes in particulars of directors.
5. DIR-8: Intimation by Director about Disqualification to the company
6. DIR-9: Report by Company of Disqualification of Director to the ROC
7. DIR-10: Application for Removal of Disqualification of Directors to the ROC
8. DIR-11: Intimation of resignation of a director.
9. DIR-12: Form for the appointment or resignation of a director.
10. DIR-3 KYC & KYC Web: Forms for the KYC of directors.
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