Every company is required to have at least certain minimum number directors in its board. Likewise it is not supposed to appoint directors beyond a certain maximum number. These conditions are given under the Companies Act, 2013 and rules made thereunder.
According to section 149 of the said Act, following are the mandatory requirements for minimum and maximum number of directors for various kinds of companies.
According to section 149 of the said Act, following are the mandatory requirements for minimum and maximum number of directors for various kinds of companies.
Minimum Number of Directors in Companies
Minimum Number of Directors in a Public Company
Every Public Limited Company shall have at least a minimum of 3(three) Directors.
Minimum Number of Directors in a Private Company
Every Private Limited Company shall have at least a minimum of 2(two) Directors.
Minimum Number of Directors in a One Person Company (OPC)
Every One Person Company shall have at least a minimum of 1(one) Director.
Maximum Number of Directors in Companies
A company can have a maximum of 15(fifteen) Directors. It may appoint more than 15 directors after passing a special resolution in the general meeting of shareholders.
Woman Director
The criteria for minimum no. of woman director in companies is described in detail - check here.
Minimum Number of Independent Directors
Refer: Section 149(4) of the Companies Act, 2013 and Rule 4 of the Companies (Appointment and Qualifications of Directors) Rules, 2014
1) Listed public companies are required to appoint at least 1/3rd of the total number of directors as independent directors.
2) Following class of unlisted public companies are required to appoint at least 2 independent directors:
• Companies with Rs. 10 crore or more of paid up share capital; or
• Companies with Rs. 100 crore or more of turnover; or
• Companies with more than Rs. 50 crore of outstanding loans, debentures & deposits in aggregate.
3) It is clear from the above provisions that private companies are not mandatorily required to appoint independent directors.
Composition of Board of Directors for Listed Entities
In addition to the above mentioned requirements, a listed entity will have to be in compliance with Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 regarding the composition of board of directors.
Minimum Number of Independent Directors
Refer: Section 149(4) of the Companies Act, 2013 and Rule 4 of the Companies (Appointment and Qualifications of Directors) Rules, 2014
1) Listed public companies are required to appoint at least 1/3rd of the total number of directors as independent directors.
2) Following class of unlisted public companies are required to appoint at least 2 independent directors:
• Companies with Rs. 10 crore or more of paid up share capital; or
• Companies with Rs. 100 crore or more of turnover; or
• Companies with more than Rs. 50 crore of outstanding loans, debentures & deposits in aggregate.
3) It is clear from the above provisions that private companies are not mandatorily required to appoint independent directors.
In addition to the above mentioned requirements, a listed entity will have to be in compliance with Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 regarding the composition of board of directors.
I love this site for providing such brief to the point information which is very useful for my understanding as a student. thanks a ton.
ReplyDeleteIf no.of directors exceeds 15 a special resolution from board is required or need to get permission from govt
ReplyDeletePlease clarify the same
Thanks in advance
A company may appoint more than 15 directors after passing a special resolution in general meeting. Approval of Central Government is not required.
DeleteConsequences for non-compliance of Minimum director's?
ReplyDeleteSince no specific penalty provision is given under section 149 - then section 172 reference will be taken.
DeleteSection 172 (Punishment)
"If a company contravenes any of the provisions of this Chapter and for which no specific punishment is provided therein, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees."
I have read in some book that minimum members to private company has been reduced from 2 to 1 as per companies act 2013
ReplyDeleteIs it right or wrong sir
Minimum number of shareholders (members) in a Private limited company is 2(two). In case of One Person Company, minimum shareholder of course is 1 (one). Please refer Section 3 of Companies Act 2013.
DeleteThanks sir
DeleteWhat are the maximum number of directors for public company sir
ReplyDeletemaximum fifteen directors
Deletea company may appoint more than fifteen directors after passing a special resolution
please refer section 149 of companies act 2013
Thanks sir
DeleteFor increasing the number of directors in government company beyond 15 whether Special resolution and CG approval is required?
ReplyDeleteIf a Public company has left only with 2 directors then:
ReplyDelete1.What will be the consequences of not complying with the minimum requirement of directors?
2. Can Public company enter into any kind of agreement/contract etc with only 2 directors left?
1. Section 149 of the Companies Act 2013 prescribes the provisions regarding requirements for minimum number of directors in a company. Sections 149 to 172 comes under Chapter XI of the Companies Act. Since section 149 doesn't prescribe any specific penal provisions for violation by a company for not complying the minimum number of directors condition, reference of section 172 under Chapter XI has to be taken here.
ReplyDeleteSection 172 (Punishment) — If a company contravenes any of the provisions of this Chapter and for which no specific punishment is provided therein, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
2. No point in entering into any agreement with the 2 directors. It'd be advisable to fill up the 3rd director position as soon as possible. The more the delay the more the chance of higher penalty.
Within what time i am suppose to appoint a Director if due to resignation of a director minimum number of directors are not complied. ??
ReplyDeleteThere doesn't seem to be any clear provision as to within how many days/ months the post should be filled in. Try to appoint the director as soon as possible, not more than couple of months, I'd suggest. You can have any of your close relatives appointed as a director until you find an eligible candidate and once you find the right candidate for the directorship, the relative can then resign from the directorship. Just a suggestion.
DeleteIn the absence of minimum quorum present in the board meeting, many important decisions which need to taken will get delayed unnecessarily.
I'm confused, I would like to know how many directors are required to run a private limited company
ReplyDeleteTwo directors.
Deletekindly provide SR TO INCREASE NO OF DIRECTORS BEYOND 15
ReplyDelete