Section 149 of the Companies Act, 2013
Section 149 of the Companies Act, 2013 – Company to Have Board of Directors
📘 Overview:
Section 149 of the Companies Act, 2013 lays down provisions related to the composition of the Board of Directors, including the minimum and maximum number of directors, resident director, woman director, and independent directors.
✅ Key Provisions:
1. Minimum and Maximum Directors:
Public company: Minimum 3 directors
Private company: Minimum 2 directors
One Person Company (OPC): Minimum 1 director
Maximum: 15 directors
Can appoint more than 15 directors by passing a special resolution
2. Resident Director [Section 149(3)]:
Every company must have at least one director who has stayed in India for a minimum of 182 days in the previous calendar year.
3. Woman Director [Section 149(1) read with Rules]:
The following companies must appoint at least one woman director:
Every listed company
Public companies with either:
Paid-up capital ≥ ₹100 crore, or
Turnover ≥ ₹300 crore
4. Independent Directors [Section 149(4) to 149(13)]:
➤ Applicability:
Every listed public company must have at least one-third of the total number of directors as independent directors.
➤ Specified public companies (unlisted) must appoint at least 2 independent directors, if they meet:
Paid-up capital ≥ ₹10 crore
Turnover ≥ ₹100 crore
Outstanding loans/debentures/deposits ≥ ₹50 crore
➤ Qualification of Independent Directors:
Not a promoter or related to promoters
No material pecuniary relationship with the company
Not a key managerial personnel (KMP) or employee in the recent past
Must possess integrity, relevant expertise, and experience
🕒 Tenure of Independent Directors:
Term: Up to 5 consecutive years
Eligible for reappointment by passing a special resolution
Cannot hold office for more than 2 consecutive terms
After 2 terms, a 3-year cooling-off period is required before reappointment
📚 Databank & Proficiency Test:
Independent directors must enroll in a databank maintained by the Indian Institute of Corporate Affairs (IICA)
Must pass an online proficiency self-assessment test within 1 year (some exemptions apply)
⚖️ Penalty for Non-compliance:
General penalty provisions under the Companies Act apply for failure to comply with Section 149.
🎯 Objective:
To ensure:
A balanced board structure
Professional and independent oversight
Better governance and transparency
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