BOARD OF DIRECTOR: SECTION 149 OF COMAPNIES ACT, 2013

SECTION 149: COMPANY TO HAVE BOARD OF DIRECTORS

NUMBER OF DIRECTORS

Every company shall have a Board of Directors consisting of Individuals as directors. The limit of directors is as follows:

The maximum number of directors that can be appointed in company is fifteen. In case a company wants to appoint more than 15 directors, Company can do so by passing a Special Resolution.

WOMEN DIRECTOR

As per Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014, the following companies shall have at least one woman director on the board: -

1. Every listed company
2. Every other public company having –

• Paid-up share capital of one hundred crore rupees or more or
• Turnover of three hundred crore rupees or more.

Explanation: - For the purposes of this rule, it is hereby clarified that the paid up share capital or turnover, as the case maybe, as on the last date of latest audited financial statements shall be taken into account.

In case of intermittent vacancy of a women director, the vacancy 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.

REQUIREMENT OF RESIDENT DIRECTOR

Every company shall have at least one director who stayed in India for a total period of not less than one hundred and eighty two days during the Financial year.

In case of a newly incorporated company, the requirement of resident director shall apply proportionately at the end of the Financial year in which it is incorporated.

NUMBER OF INDEPENDENT DIRECTORS

Every listed Public Company shall have at least one third of the total number of Directors as Independent Directors and the Central Government may prescribe the minimum number of Independent Directors in case of any class or classes of Public Companies.

Explanation: - For the purposes of this sub section, any fraction contained in such one third number shall be rounded off as one.

As per Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014, the following class or classes of companies shall have at least two directors as Independent Directors: -

1. The Public Companies having paid up share capital of ten crore rupees or more; or
2. The Public Companies having turnover of one hundred crore rupees or more; or
3. The Public Companies which have, in aggregate outstanding loans, debentures and deposits, exceeding fifty crore rupees.

In case a company covered under this rule is required to obtain a higher number of independent directors due to the composition of its audit committee, such higher number of independent directors shall be applicable to it.

In case of intermittent vacancy of an independent director, the vacancy shall be filled up by the Board of Directors at the earliest but not later than immediate next Board Meeting or three months from the date of such vacancy, whichever is later.

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 condition.

Explanation: - For the purposes of this rule, it is hereby clarified that, the paid up share capital or turnover or outstanding loans, debentures and deposits, as the case may be, as existing on the last date of latest audited financial statements shall be taken into account

A company belonging to any class of companies for which a higher number of independent directors has been specified in the law for the time being in force shall comply with the requirements specified in such law.

An independent director shall hold office for a term up to five consecutive years on the Board of Director of a company but shall be eligible for re appointment on passing of a special resolution by the company.

No independent director shall hold office for more than two consecutive terms (two 5 year terms), but such independent director shall be eligible for appointment after the expiration of three years of ceasing to become independent director.

The following classes of unlisted public company shall not fall under the above limits of sub-rule (1): -

1. A joint venture,
2. A Wholly owned subsidiary, and
3. A dormant company ad defined under Section 455 of the Act

CONCLUSION

Section 149 of the company’s Act mandates that every company to have a board of directors comprising individuals within prescribed limits. A public company must have atleast 3 Directors, a private company 2 and a One-person company one, with a maximum of 15 directors unless a special resolution has been passed. Listed company and certain public company are required to appoint at least one women director. All companies must have atleast one resident director who resides in India for at least 182 days in a financial year. For listed Public Companies, one third of directors must be independent. Independent directors are not entitled to stock options but may receive fees and approved remuneration. They serve a maximum of two consecutive five year terms, subject to special resolution. They serve a maximum of two consecutive five year terms, subject to special resolution, with a three-year colling off period. Independent Directors liability is limited to acts done with their knowledge or consent. These provisions ensure proper governance and accountability within companies.