Introduction
Section 2(34) of the Companies Act, 2013 (hereinafter referred to as CA, 2013) defines director is someone appointed to the board of the company. Section 149 of the CA, 2013 provides that company to have a board of directors. In a public company there should be a minimum of 3 directors and in case of a private company there should be a minimum of 2 directors and for one person company there should be at least 1 director. Further, in all the three kind the maximum number of directors is restricted to 15.
| Minimum directors | Maximum directors | |
| Public company | 3 | 15 |
| Private company | 2 | 15 |
| One person company | 1 | 15 |
Proviso to Section 149(1) states that a company other than a government company and a section 8 company can increase the number of directors beyond 15 after passing a special resolution (SR). The maximum limit of directors doesn’t apply to government company and section 8 company. They have been exempted vide notification no. GSR 463(E) dated 5.06.2015 and GSR(E) dated 13.06.2017.
Step-by-Step Procedure
Step 1- Call a Board Meeting
- As per sections 14(1), 149(1) first proviso and 173 and Secretarial Standards-1, a board meeting has to be called or pass a board resolution by circulation. It should consider and approve the proposal to increase the number of directors which can be appointed by the company beyond 15.
- Also approve the alteration of AOA, if any.
- Approve draft notice of the general meeting along with an explanatory statement for the purpose of passing the special resolution.
- Fix day, date, time, and agenda for the general meeting wherein a special resolution has to be passed to give effect to the change.
- Approve draft notice of the general meeting with an explanatory statement for purpose of passing the special resolution.
- Authorize CS or any other officer to issue notice of the general meeting under the authority of the Board to every member and every other person entitled to it.
Step 2- Call a General Meeting
- A general meeting has to be called per Section 14(1), 149(1) first proviso, 100 and 110 and Secretarial Standard-2.
- Special resolution has to be passed at the general meeting for increasing the number of directors that can be appointed in the company or to alter the AOA.
- Resolution maybe passed by the postal ballot
- Amendment is needed in the AOA only if there is an express restriction on appointment of directors beyond 15.
Step 3- Time Bound Disclosures
- A listed company is required to submit proceedings of the general meeting to stock exchanges where it is listed within 24 hours of conclusion of the general meeting as per regulations 30 and 46(3) of the SEBI (LODR) Regulations, 2015.
- Further, it should post the findings of the meeting on the company website within 2 days.
- Regulation 44 of the SEBI (LODR) Regulations, 2015 requires that the listed company shall submit to the stock exchange within 48 hours of conclusion of its general meeting the details regarding the voting rights in the format specified by SEBI.
Step 4- Form and Documents Filing
- Section 117 read with Rule 24 of the Companies (Management and Administration) Rules, 2014 requires that a copy of the special resolution along with an explanatory statement is filed with the ROC within 30 days of passing in Form MGT-14 along with relevant documents and fees.
Step 5- Post Compliances
- To be in conformity with Section 15(1), it must be ensured that the alterations made in articles is noted in every copy of AOA.
Documents Required
- For filing SR with ROC- Form MGT-14
- Certified true copy of SR along with a copy of explanatory statement under section 102
- Altered copy of AOA.
Conclusion
This process can take between 3 days to 61-65 days. By using the above discussed procedure the limit of 15 directors can be increased.
