149- Company to have Board of Directors
(1) Company shall have a Board of Directors: Every company shall have a Board of Directors consisting of individuals as directors.
(2) Minimum Number of Directors: In case of a public company, the minimum number of directors is three. In case of a private company, the minimum number of directors is two. In case of One Person Company, the minimum number of directors is one.
(3) Maximum Number of directors – The maximum number of directors that a company can have is limited to fifteen. But, a company may appoint more than fifteen directors after passing a special resolution.
(4) Requirement of woman director:
The following class of companies shall appoint at least one-woman director-
(i) every listed company;
(ii) every other public company having –
(a) paid–up share capital of one hundred crore rupees or more; or
(b) turnover of three hundred crore rupees or more:
(5) Requirement of Resident Director: Every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year: Provided that in case of a newly incorporated company the requirement under this sub-section shall apply proportionately at the end of the financial year in which it is incorporated.
(6) Requirement of Independent director:
(i) Every listed public company shall have at least one-third of the total number of directors as independent directors.
(ii) The following class or classes of companies shall have at least two directors as independent directors –
(a) the Public Companies having paid up share capital of ten crore rupees or more; or
(b) the Public Companies having turnover of one hundred crore rupees or more; or
(c) the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees
Provided that in case a company covered under this rule is required to appoint a higher number of independent directors due to composition of its audit committee, such higher number of independent directors shall be applicable to it:
Provided further that any intermittent vacancy of an independent director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy, whichever is later:
Provided also that where a company ceases to fulfil any of three conditions laid down in sub-rule (1) for three consecutive years, it shall not be required to comply with these provisions until such time as it meets any of such conditions.
(iii) The following classes of unlisted public company need not appoint independent directors:
(a) a joint venture;
(b) a wholly owned subsidiary; and
(c) a dormant company as defined under section 455 of the Act.
(iv) For the purposes of calculation of the number of independent directors, any fraction contained in such one-third number shall be rounded off as one.
150. Manner of Selection of Independent Directors and Maintenance of Databank of Independent Directors
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151. Appointment of Director Elected by Small Shareholders
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152. Appointment of Directors
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153. Application for Allotment of Director Identification Number
154. Allotment of Director Identification Number
155. No individual, who has already been allotted a Director Identification Number under section 154, shall apply for, obtain or possess another Director Identification Number
156. Director to Intimate Director Identification Number
157. Company to Inform Director Identification Number to Registrar
158. Obligation to Indicate Director Identification Number
159. Penalty for Default of Certain Provisions
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160. Right of Persons Other than Retiring Directors to Stand for Directorship
1) A Persons other than Retiring Directors can stand for directorship or a member can propose the name of a person for directorship in a general meeting of the company, by giving a notice in writing under his hand signifying his candidature as a director or, the intention of such member to propose him as a candidate for that office. The notice shall be given to the company before fourteen days of the meeting long with the deposit of one lakh rupees. The deposit amount shall be refunded if the person proposed gets elected as a director or gets more than twenty-five per cent. of total valid votes cast either on show of hands or on poll on such resolution. The requirements of deposit of amount shall not apply in case of appointment of an independent director or a director recommended by the Nomination and Remuneration Committee, if any, constituted or a director recommended by the Board of Directors of the Company, in the case of a company not required to constitute Nomination and Remuneration Committee.
(2) The company shall, at least seven days before the general meeting, inform its members of the candidature of a person for the office of a director or the intention of a member to propose such person as a candidate for that office-
(i) by serving individual notices, on the members through electronic mode to such members who have provided their email addresses to the company for communication purposes, and in writing to all other members; and
(ii) by placing notice of such candidature or intention on the website of the company, if any.
It shall not be necessary for the company to serve individual notices upon the members as aforesaid, if the company advertises such candidature or intention, not less than seven days before the meeting at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and circulating in that district, and at least once in English language in an English newspaper circulating in that district.
(3) Section 160 shall not apply to private company. In case of Section 8 company – Section 160 shall not apply to companies whose articles provide for election of directors by ballot. In case of nidhi company, the deposit amount shall be ten thousand rupees. Section 160 shall not apply to (a) a Government Company in which the entire paid up share capital is held by the Central Government, or by any State Government or Governments or by the Central Government and one or more State Governments; and (b) a subsidiary of a Government company, referred to in (a) above, in which the entire paid up share capital is held by that Government company. In case of Specified IFSC Public Company – Section 160 shall apply as per the articles framed by the company.
161. Appointment of Additional Director, Alternate Director and Nominee Director
(1) Appointment of Additional Director: The articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier.
(2) Appointment of Alternate Director: The Board of Directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a person holding any alternate directorship for any other director in the company or holding directorship in the same company, to act as an alternate director for a director during his absence for a period of not less than three months from India:
Provided that no person shall be appointed as an alternate director for an independent director unless he is qualified to be appointed as an independent director under the provisions of this Act:
Provided further that an alternate director shall not hold office for a period longer than that permissible to the director in whose place he has been appointed and shall vacate the office if and when the director in whose place he has been appointed returns to India;
Provided also that if the term of office of the original director is determined before he so returns to India, any provision for the automatic re-appointment of retiring directors in default of another appointment shall apply to the original, and not to the alternate director.
(3) Appointment of Nominee Director: Subject to the articles of a company, the Board may appoint any person as a director nominated by any institution in pursuance of the provisions of any law for the time being in force or of any agreement or by the Central Government or the State Government by virtue of its shareholding in a Government company.
(4) Appointment of Director in casual vacancy: if the office of any director appointed by the company in general meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the company, be filled by the Board of Directors at a meeting of the Board which shall be subsequently approved by members in the immediate next general meeting;
Provided that any person so appointed shall hold office only up to the date up to which the director in whose place he is appointed would have held office if it had not been vacated.
162. Appointment of Directors to be Voted Individually
1) At a general meeting of a company, a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be moved unless a proposal to move such a motion has first been agreed to at the meeting without any vote being cast against it.
(2) A resolution moved in contravention of sub-section (1) shall be void, whether or not any objection was taken when it was moved.
(3) A motion for approving a person for appointment, or for nominating a person for appointment as a director, shall be treated as a motion for his appointment.
(4) In case of private company – Section 162 shall not apply – Notification dated 5th june, 2015.
(5) In case of Government Company – Section 162 shall not apply to :-
(a) a Government Company in which the entire paid up share capital is held by the Central Government, or by any State Government or Governments or by the Central Government and one or more State Governments;
(b) a subsidiary of a Government company, referred to in (a) above, in which the entire paid up share capital is held by that Government company.
(6) In case of Specified IFSC Public Company – Section 162 shall not apply
163. Option to Adopt Principle of Proportional Representation for Appointment of Directors.
The articles of a company may provide for the appointment of not less than two-thirds of the total number of the directors of a company in accordance with the principle of proportional representation, whether by the single transferable vote or by a system of cumulative voting or otherwise.
164. Disqualifications for Appointment of Director
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165. Number of Directorships
(1) No person, after the commencement of this Act, shall hold office as a director, including any alternate directorship, in more than twenty 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 ten.
Explanation I – 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.
Explanation II-For reckoning the limit of directorships of twenty companies, the directorship in a dormant company shall not be included.
(2) 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 directors.
(3) If a person accepts an appointment as a director in violation of this section, he shall be liable to a penalty of two thousand rupees for each day after the first during which such violation continues, subject to a maximum of two lakh rupees.
166. Duties of Directors
(1) Subject to the provisions of this Act, a director of a company shall act in accordance with the articles of the company.
(2) A director of a company shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of environment.
(3) A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
(4) A director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
(5) A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company.
(6) A director of a company shall not assign his office and any assignment so made shall be void.
(7) If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
167. Vacation of Office of Director
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168. Resignation of Director
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169. Removal of Directors
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170. Register of Directors and key Managerial Personnel and their Shareholding
1) Every company shall keep at its registered office a register containing such particulars of its directors and key managerial personnel as may be prescribed, which shall include the details of securities held by each of them in the company or its holding, subsidiary, subsidiary of company’s holding company or associate companies.
2) A return containing such particulars and documents as may be prescribed, of the directors and the key managerial personnel shall be filed with the Registrar within 2&3[thirty days] from the appointment of every director and key managerial personnel, as the case may be, and within thirty days of any change taking place.
171. Members’ Right to Inspect
(1) The register kept under sub-section (1) of section 170,—
(a) shall be open for inspection during business hours and the members shall have a right to take extracts therefrom and copies thereof, on a request by the members, be provided to them free of cost within thirty days; and
(b) shall also be kept open for inspection at every annual general meeting of the company and shall be made accessible to any person attending the meeting.
(2) If any inspection as provided in clause (a) of sub-section (1) is refused, or if any copy required under that clause is not sent within thirty days from the date of receipt of such request, the Registrar shall on an application made to him order immediate inspection and supply of copies required thereunder.
172. Penalty
If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.