In how many companies a Director can hold office or in how many Committees a Director can be a Chairperson or Member ?
Following are the legal provisions guiding the above matter :
1. Section 165 of the Companies Act, 2013 –
2. Regulation 17A of the SEBI (LODR) (Amendment) Regulations, 2021
3. Regulation 26 of the SEBI (LODR) (Amendment) Regulations, 2021
- As per Section 165 of the Act, a Director can hold directorship, including any alternate directorship in maximum 20 Companies. However, directorship in Public companies shall be restricted to 10. The main part is that for reckoning the limit of directorships in public companies, directorship in private companies that are either holding or subsidiary company of a public company shall also be included. If we go by definition of a Public Company [ as per the proviso section 2(71) of the Act], only subsidiary company of a public company is public company, but here, for reckoning the limit of Directorship in public companies, even holding company(which might be private company) of public company will be a public company.
Directors of Listed entities have to comply with SEBI (LODR) Regulations as well, which are as below:
- As per Regulation 17A, A person shall not be a director in more than seven listed entities. Also, maximum number of listed entities in which a person may serve as an Independent Director is Seven listed entities, provided that if the person is serving as a whole-time director or managing director in any listed entity, the limit for him to hold independent directorship reduces to three listed entities.
- As per Regulation 26, a Director can become a Member of maximum ten Committees and act as a Chairperson of maximum five committees across all listed entities. Here, we have to note that the Committees are considered only of Public Companies(whether listed/unlisted) and Private companies, Section 8 companies, Foreign Companies are excluded while reckoning limits. Also, the main part to focus is that the limit of chairperson and membership have to be taken of only Audit Committee and Stakeholder Relationship Committee.
The Crust of the above legislative provisions will be :
Feel free to comment any query.