Number of directorship (Section 165 of the Companies Act, 2013) :

Section 165 of the Companies Act, 2013 provides for the maximum permissible number of directorships that a person can hold. According to this section:

(i) No person, after the commencement of this Act, shall hold office as director, including any alternate directorship, in more than 20 companies at the same time. [Section 165(1)]

Provided that out of the limit of 20, the maximum number of public companies in which a person can be appointed as a director shall not exceed 10. [Proviso to section 165(1)]

Private companies that is either holding or subsidiary company of a public company shall be included in reckoning the limit of public companies in which a person can be appointed as a director.

The MCA vide Notification No. 466(E) dated 5th June, 2015, has clarified that section 165(1) of the Companies Act, 2013, [ie. Point (i)] shall not apply to section 8 companies.

(ii) The members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as directors. [Section 165(2)]

(iii) Transition period for complying with sub-section (1) is one year and within this period, if any director is holding office as director in companies more than the specified limits, he shall –

(a) choose not more than the specified limit of companies, in which he wishes to continue to hold the office of director;

(b) resign his office as director in the other remaining companies; and

(c) intimate the choice made by him under clause (a), to each of the companies in which he was holding the office of director before such commencement and to the Registrar having jurisdiction in respect of each such company. [Section 163(3)]

(iv) Any resignation made in pursuance of clause (b) of sub-section (3) shall become effective immediately on the dispatch thereof to the company concerned. [Section 163(4)]

(v) After dispatching the resignation of his office as director or non-executive director or after the completion of the transition period of one year, whichever is earlier, no such person shall act as director in more than specified number of companies.

(vi) If a person accepts an appointment as a director in contravention of sub-section (1) i.e. holding directorship in more than 20 companies or more than 10 public companies, he shall be punishable with fine which shall not be less than Rs. 5,000 but which may extend to Rs. 25,000 for every day after the first during which the contravention continues.