Understanding the Role of Directors in Company Law 2013:Limits on the Minimum and Maximum Number of Directors

Introduction

An entity registered by the guidelines outlined in The Companies Act 2013 and by a court of law. According to the legislation, a corporation must have one or more directors to function correctly and be governed. 

Depending on the rules outlined in The Companies Act of 2013, a company’s minimum and maximum number of directors may change. 

Directorship restrictions within an incorporation

The minimum and maximum number of directors that a company must retain at all times, both before and throughout the company’s active existence, are specified under the Companies Act of 2013.

A Public Limited Company’s director(s)

Three directors are the bare minimum needed to manage a public business. A special resolution can be passed to appoint additional directors if a public corporation needs to have more than a maximum of fifteen directors.

Directors of Limited Liability Companies

Two directors are the bare minimum needed to manage a private limited corporation. A private limited business is allowed a maximum of 15 directors.

A Limited Liability Partnership’s partner or partners

Two partners are the bare minimum needed to manage a limited liability partnership. There is no upper limit to the number of participants required for a limited liability partnership. They can be extended to the extent that the firm needs them.

Director or directors of Producer Company

Five directors are the bare minimum needed to manage a producing business. The maximum number of directors- 15, can be raised by enacting a special resolution.

When considering a company’s director or directors, a few more crucial considerations need to be made in addition to the number of directors.

Reduction in the Total Number of Director Positions

A person’s number of directorships may be lowered under Section 165(2) of the Act. A business may designate any value below 20 for the maximum number of times its directors may serve as directors of other companies. 

By adopting a special resolution, a company’s members can designate fewer director positions for their members.  For example, ABC is named a director of the XYZ corporation.

A special resolution adopted by XYZ Company specifies that its directors may hold directorships in ten companies. Then, ABC is limited to serving as a director in ten firms. 

Despite the Act’s provision that a person may serve as a director in up to 20 businesses, Abc is only eligible to serve as a director in 10 because of XYZ’s resolution, which reduced the limit to 10. He will violate the Act if he occupies the director position for over ten years.

For future reference, every company owner must abide by the number of directors specified for each type of company in The Companies Act of 2013. 

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