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June 15, 2016 Registrationwala

Essential points to become Director in the company

Private Limited Company

Essential points to become Director in the company

Director position in the company considered being most important because we all know that company is only a legal person, unlike a living human being. In order to enable a company to achieve its objective and growth, it is necessary to depend on some agency, known as the board of directors.

Members of the Board of Directors of the company are known as directors, who manage a company. In brief, we can say that Directors are the brain of the company.

The Companies Act, 2013 prescribes the minimum qualification which an individual must possess before becoming a director. Before putting a light on the basics or minimum qualification to be a director, we want to clear one thing that only an individual can be a director in the company, therefore, company or LLP or any other body corporate canít become a director in the company.

Letís understand the qualifications required if you going to be a director:

The first requirement to be a director in the company is to have DIN (Director Identification Number). DIN is an 8 digit number allotted to a person who is proposed to be a director in the company. No person can become a director without first applying for DIN. It is a unique identification number for an existing director or a person intending to become one, and it is allotted by the Ministry of Corporate Affairs (MCA).

Secondly, you should count the number of companies in which you have already held directorship because companies act prohibits holding directorship beyond certain numbers; this number is 20, and even out of this 20 companies, you can hold maximum 10 directorships of the public limited company.

Another important point which may not be relevant from the individual point of view but important to companies is that all types of companies whether public limited companies or private limited companies must have at least one director who shall be resident in India.

Even the lawmaker to empowering the women and to increase the gender diversity at the board of director level prescribes the compulsory appointment of one woman director in certain companies.

In addition to the above said points, if a person is not considered to be eligible for the post of directors if:

  • you are not proper mentally fit;
  • You have been convicted by the court of any offence and sent to jail for that offence for a period of 6 months minimum.
  • You have been convicted of the offence dealing with parties related to the person in contravention of section 188.
  • You are already a director in the company which has failed to file financial statement OR annual return for a continues period of three years, or failed to repay the deposits or debenture or interest then you shall not be eligible to be re-appointed as a director of defaulting company or appointed in other company for certain time period.

Even private limited companies prescribe any other disqualification for the appointment as a director in addition to above criteria in its articles of association (AOA).

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