Understanding Directors’ Qualifications and Disqualifications: A Comprehensive Overview

Introduction

Section 162 of the Companies Act is a specific clause that emphasizes the reasons why an individual may not be appointed as a directors. Under the Act, there is no such clause pertaining to qualification. However, the following is a list of requirements.

1. The individual in question ought to be at least eighteen years old.
2. Nationality is frequently either Indian or other.
3. In order to receive a director’s identity number (DIN), the individual must have their own Digital Signature Certificate (DSC).
4. The individual must also provide a written declaration stating that he does not belong to the list of disqualified members and that he has permission to serve as the Director.
5. A person who wishes to become a director of a corporation need not possess any academic qualifications.

Appointment of Directors

A director is frequently appointed by:

• First Director subscribing to the memorandu
• A resolution (Director/Regularization/Reappointment) passed at a general meeting
• Small Shareholders (Small shareholders director); 
• Board of Directors (Alternate, Casual, or Additional Director);
• Tribunal

Duties of a Director

The responsibilities of a director in a company are discussed in Section 166. Their obligation is:

• To behave with care and attention; to operate in good faith; to follow the corporate articles; to avoid any conflicts of interest and, as a result, not to obtain excessive advantage; not to provide the other person office space.

Requirements for a Director

The Companies Act of 2013 does not explicitly mention director qualifications. However, by the various regulations about the directors, the following credentials may be stated:

1. A director needs to be a rational individual.
2. If specified in the articles of association, a director must possess shared qualifications.
3. A director needs to be a single person.
4. A director ought to be financially stable.
5. The Court should not find a director guilty of any crime.

Director Disqualifications

The disqualification is outlined in Section 164 of the Companies Act 2013 as follows:

1. An individual cannot be appointed as a director of a firm if the director is
   1. Found to be insane by a court with appropriate jurisdiction, and the judgment is upheld;
   2. An unreleased insolvent party;
   3. Has submitted an application to be declared insolvent, and it is now pending;
   4. Has been found guilty by a court of any crime involving moral turpitude and sentenced to a minimum of six months in jail, with the option to serve an additional five years beyond the sentence’s expiration date;
   5. Six months have passed from the last day set for the payment of the call, and he has not paid any call regarding shares of the company he owns, either alone or jointly with others or
   6. A court has issued an order disqualifying him from being appointed as director, which is in effect unless the court has granted permission for him to be appointed following section 203;

2. This individual currently serves as a director of a publicly traded firm that
   1. Has not, for any consecutive three fiscal years beginning on or after April 1, 1999, submitted the annual accounts and annual reports; or
   2. Has not paid dividends for a year or longer, redeemed its debentures by the deadline, repaid deposits or interest thereon, or repaid any of these obligations

With the caveat that, for five years following the date on which the public company in which he serves as a director failed to file annual accounts and returns under subclause (A), repay its deposit or interest, redeem its debentures by the deadline, or pay the dividend mentioned in clause (B), said person will not be eligible to be appointed as a director of any other public company.

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