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What Is The Ideal Number of Directors for A Small Company?

The appointment and qualification of Directors is conducted according to the Companies Act of 2013. Learn how to choose the total number of Directors for your company and the steps to register them ASAP.

Every company’s management is incomplete without a director. The Companies Act, 2013 governs the appointment and qualification of directors.  According to the Companies Act, 2013, Section 2 (34), the term director refers to a person appointed to the board of a company to perform directorial duties.

A board of directors is a group of trustworthy and respectful people who focus on improving the company’s productivity and meeting the interest of shareholders.

Minimum Number of Directors in a Private Company

The total number of directors is fixed as per the Companies Act of 2013. The director composition of the board varies among public companies and private companies. 

Section 149 (1) of the Companies Act, 2013 clearly states that the private company should have at least two directors, and a single director in the case of a one person company.  However, a company can appoint up to 15 or more directors after passing a special resolution in the general meeting. 

Minimum Number of Directors in Public Company

Based on Section 149 (1) of the Companies Act of 2013, a public company should have at least 3 directors.  According to the Companies Act, 2013, they should appoint at least one woman director within the year of commencement.  The residence of a director in India is mandated under this Act.

Number of Directorships – Section 165

When it comes to an individual directorship, one can hold up to 20 director portfolios. In the case of a public company, this is limited to 10.  The criteria for holding several director portfolios are clearly explained under Section 165. It restricts an individual from taking up directorship more than the prescribed limits.

If the individual accepts the role of a director in more than 20 companies, they will have to pay penalties for non-compliance with Section 165. The penalty ranges from ₹5000 to ₹25,000 for every day. 

Role of a Director According to the Companies Act, 2013

According to the company’s activities, a director will perform the required duties and bear certain liabilities within their power. 

  • The director should always act as per the company’s articles of association
  • The director should act in good faith and promote the objectives of the company 
  • they should act in the best interest of the company 
  • At any point, they should avoid direct or indirect conflict of interest 
  • They should avoid undue gain or advantage for personal use or for their relative’s, partners, or associates
  • The director should not assign their office to any other person.

Different Types of Directors in a Company 

The company will have different types of directors who function according to the roles described under the Companies Act of 2013. Based on the functions, the directors are differentiated as executive and non-executive directors. 

The executive director is an internal professional. A managing director, and a whole-time director will come under this category. A nominee director and an independent director comes under the category of non-executive director 

The company can also appoint an additional director, an alternate director, and a casual vacancy director. In some cases, the residential directors, small shareholder directors, and shadow directors are appointed. As per the companies Act of 2013 it is mandatory to have at least one female director on the board. 

Appointment and Qualification of Directors

The Companies Act of 2013 dictates the appointment and qualification process of directors. According to the Act, the directors can be appointed under different scenarios; however, they have to meet all the eligibility criteria for the appointment. 

Qualification of Directors Under the Companies Act, 2013

  • A single person with an active director identification number (DIN) should be appointed as a director.
  • To be appointment of director, they should possess a Digital Signature Certificate (DSC) from a certifying authority 
  • The director should furnish their consent to act as a director by filling out the DIR-2 form on or before their appointment
  • The person should be qualified under sub-section (1) of Section 164 of the Companies Act of 2013 
  • As per the Companies Act of 2013, the person should not hold a directorship in more than 20 companies at the same time. This also includes the alternate directorship  
  • The individual can hold directorship up to 10 companies in the public sector and not beyond that.

If the director suits all the criteria mentioned above, then they can be appointed.

 How Vakilsearch Can Help in Company Director Registration 

As you can see, registering the company along with the director is a complex process, and it involves a lot of legalities. This is where Vakilsearch can make a difference. We can complete the entire registration process in just 14 days. 

Starting from

  •  Procuring DIN and DSC for two directors of company
  •  Drafting the Memorandum of Association (MoA) and Article of Association (AoA)
  • Taking care of registration fees and stamp duty
  • Procuring company incorporation certificate, company Permanent  Account Number (PAN), and Tax Deduction Account Number (TAN): https://incometaxindia.gov.in/Pages/tan-tds.aspx
  • Creating a zero balance current account with DBS Bank

All you have to do is, get in touch with the experts at Vakilsearch, and we have got you completely covered!

FAQs – Number of Directors In A Company

How many board members should a company have?

The number can vary between 7 and 10. However, a minimum of two Directors has to be appointed in the case of privately held companies. If it is a one-person company, at least one Director has to be appointed.

Who can be appointed as the company director?

As per the rules, only an individual should be fixed as a company director. The nationality of the individual doesn't matter; however, a minor can never be a director of the company.

How many local directors does a company need?

Every company should have at least one local director and a secretary.

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