Section 165(1) A person cannot hold directorship including alternate directorship in more than 20 companies.

Section 165 (1) not applicable to section 8 company.

In the above limit of 20 dormant company is excluded.

The maximum number of public companies in which a person can be appointed as a director shall not exceed ten.

In the above limitations of 10 –a private company which is a holding or subsidiary of the public company also counted.

From above we can conclude that a person can hold directorship in maximum ten public companies (in which private company which is holding or subsidiary of the public company Is also included.) and ten other companies such as private company section 8 company, small company, one-person company.

Section 165(2) subject to the provision of subsection(1), the members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as a director.

 Consequences of Contravention

Section 164– Disqualification of Director

  In section 164 a new subsection (1) of clause (i) has been inserted

“(i) he has not complied with the provision of subsection (1)of section 165”

Section 165(6)- Penalty

If a person accepts directorship in contravention of subsection (1) of section 165, he shall be liable to the penalty of rupees five thousand for each day after the first during which such contravention continues.

Impacts of Above Provisions Stated Below

1. For non- compliance of section 165 of the act director shall stand disqualified.

2. Office of such disqualified director shall immediately vacate in all the companies in which he holds directorship.

3. A penalty of rupees five thousand for each day after the first day during which such contravention continues.

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January 2021