18 July 2013
The Companies Act does not prescribe any qualification for a person to become director in a company. However, director of a company may be required by the Articles to hold certain shares in the company to be eligible to become director in the company (Sec. 2 70). These shares are called qualification shares.
The nominal value of these qualification shares must not exceed Rs. 5,000 or the nominal value of one share where it exceeds Rs. 5,000. A director may purchase these qualification shares within 2 months of his appointment.
A person cannot be asked to obtain qualification shares before his appointment as a director or within a period shorter than 2 months of his appointment. The bearer of a share warrant shall not be deemed holder of shares for the purposes of qualification shares.
A person who acts as a director of a company without holding qualification shares after the expiry of the period of two months from the date of his appointment shall have to vacate his office as a director and shall be punishable with a fine extending to Rs 500 for every day from the date of expiry of the period of two months till the date he continues to act as a director (Sec. 272).
18 July 2013
Agree with the expert.. its not compulsory.. if articles of the company provide for it than only .. a director is required to hold qualification shares...
CAclubindia
