09 March 2023
As per section 149 of the Companies Act, 2013 the maximum no. of directors which can be appointed in a company cannot exceed 15. Provided that a company may appoint more than fifteen directors after passing a special resolution.
Question No. 1 Can a company specify lower limit (but not less than 3 in case of public company,2 in case of Private Company and 1 in case of OPC) than 15 directors in its articles? If yes, than as per which provision/section it is permissible? For Example- A public limited company specified in its articles that maximum number of directors shall be 12 in there company. Is it valid to specify lower limit than 15 in the articles? If yes, than as per which provision/section it is permissible?
Question No. 2 Whether the articles of the company can state the maximum limit of directors higher that the statutory maximum limit i.e. 15? For Example - A public limited company want to specify in its articles that maximum director in the company will be 17. So whether the company can specify maximum number of directors more than 15 in its articles?
Question No. 3 As we know that maximum limit of director in a company can be 15 as per act. More than 15 can be appointed by passing special resolution So which of these options is correct for appointment of director in ABC Ltd? Maximum Limit as per Act – 15 Directors Maximum Limit as per Articles of ABC Ltd. – 13 Number of Existing Directors in ABC Ltd. – 11 Number of New Directors to be appointed in ABC Ltd. – 6 Total Number of Directors in ABC Ltd after appointment of new directors will be – 17(11+6) Now to appoint new directors in ABC ltd. which of the following option is correct?
Option A – In General Meeting - 2 Ordinary Resolution will be passed u/s 152(2) to appoint 2 new directors out of the 6 new directors to be appointed as the maximum limit provided in articles of ABC Ltd. is 13 and existing directors are 11 only so 2 new directors can be appointed simply by passing ordinary resolutions. AND In General Meeting – 4 Special Resolutions will be passed to appoint remaining 4 new directors out of the 6 new directors to be appointed as the maximum limit provided in the articles is 13 only and we have already appointed 13 directors (11 existing directors + 2 new directors appointed by passing 2 ordinary resolutions in general meeting).
Option B - Firstly, In General Meeting – 1 Special Resolutions will be passed u/s 14 to alter the articles of ABC Ltd. so that the existing limit of maximum number of directors given in articles of ABC Ltd. as 13 can be altered and changed to maximum number of directors as 17. (This is possible only if it is permissible that articles of company can state the maximum limit of directors higher that the statutory maximum limit i.e. 15). AND In General Meeting – 6 Ordinary Resolutions will be passed u/s 152(2) to appoint 6 new directors in the ABC Ltd. (No special resolution will be required to appoint the 6 new directors as the now the articles of the ABC Ltd. has been altered and changed that maximum number of directors which can be appointed in the ABC Ltd. is 17 by passing special resolution in general meeting).
Option C- Firstly, In General Meeting – 1 Special Resolution will be passed u/s 14 to alter the articles of ABC Ltd. so that the existing limit of maximum number of directors given in articles of ABC Ltd. as 13 can be altered and changed to maximum number of directors as 15. (This is possible when articles of company cannot state the maximum limit of directors higher that the statutory maximum limit i.e. 15). AND In General Meeting – 4 Ordinary Resolutions will be passed u/s 152(2) to appoint 4 new directors out of the 6 new directors to be appointed in the ABC Ltd. (No special resolution will be required to appoint the 6 new directors as the now the articles of the ABC Ltd. has been altered and changed that maximum number of directors which can be appointed in the ABC Ltd. is 15 by passing special resolution in general meeting). AND In General Meeting – 2 Special Resolutions will be passed to appoint remaining 2 new directors out of the 6 new directors to be appointed in the ABC Ltd. as per proviso of section 149(1) which states that “Provided that a company may appoint more than fifteen directors after passing a special resolution”.
10 March 2023
Thank you sir for your reply Sir for Question no. 2 u have answered Yes which means that the articles of the company can specify maximum number of directors more than the statutory maximum i.e. 15 also so in Question No. 3 why cannot we choose option B as correct option? Please provide the rationale behind not choosing option A and option B in Question No. 3
10 March 2023
Yes you are right which means that the articles of the company can specify maximum number of directors more than the statutory maximum i.e. 15. Option A Articles amendment not made to enhance the limit. Option B Special resolution not passed for directors in excess of 15.
10 March 2023
Sir kindly clarify further :- You said that that the articles of the company can specify maximum number of directors more than the statutory maximum i.e. 15. Even than also in option B of Question 3 it is not just enough if we have passed 1 special resolution in general meeting to alter the articles of ABC Ltd. so that the existing limit of maximum number of directors given in articles of ABC Ltd. as 13 can be altered and changed to maximum number of directors as 17.
i.e. articles can specify maximum number of directors more than 15 but even if the article specify maximum number of directors more than 15 than also the company will be required to pass special resolution in general meeting for appointing directors above 15. Hence option B will be valid only when:- In General Meeting - 1 Special Resolution is passed to alter the articles for increase in the number of maximum number of directors from 13 to 17. AND In General Meeting - 4 Ordinary resolutions will be passed for appointment of 4 new directors out of the 6 new directors to be appointed in ABC Ltd.(after this the number of directors in the company will be 15 (11 Existing Directors and 4 new directors appointed by passing ordinary resolution) AND In General Meeting - 2 Special Resolution will be passed to appoint remaining 2 new directors out of the 6 new directors to be appointed in the ABC Ltd. Now, special resolution will be required even if articles specify that maximum number of directors which can be appointed in ABC Ltd is 17 because proviso of section 149(1) says that “Provided that a company may appoint more than fifteen directors after passing a special resolution”
11 March 2023
Sir kindly clarify further :- You said that that the articles of the company can specify maximum number of directors more than the statutory maximum i.e. 15.
Even than also in option B of Question 3 it is not just enough if we have passed 1 special resolution in general meeting to alter the articles of ABC Ltd. so that the existing limit of maximum number of directors given in articles of ABC Ltd. as 13 can be altered and changed to maximum number of directors as 17.
i.e. articles can specify maximum number of directors more than 15 but even if the article specify maximum number of directors more than 15 than also the company will be required to pass special resolution in general meeting for appointing directors above 15.
Hence option B will be valid only when:- In General Meeting - 1 Special Resolution is passed to alter the articles for increase in the number of maximum number of directors from 13 to 17. AND In General Meeting - 4 Ordinary resolutions will be passed for appointment of 4 new directors out of the 6 new directors to be appointed in ABC Ltd.(after this the number of directors in the company will be 15 (11 Existing Directors and 4 new directors appointed by passing ordinary resolution) AND In General Meeting - 2 Special Resolution will be passed to appoint remaining 2 new directors out of the 6 new directors to be appointed in the ABC Ltd. Now, special resolution will be required even if articles specify that maximum number of directors which can be appointed in ABC Ltd is 17 because proviso of section 149(1) says that “Provided that a company may appoint more than fifteen directors after passing a special resolution”
11 March 2023
Yes you are right, now, special resolution will be required even if articles specify that maximum number of directors which can be appointed in ABC Ltd is 17 because proviso of section 149(1) says that “Provided that a company may appoint more than fifteen directors after passing a special resolution.
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