Director in private limited company

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Can anyone become director in Private Limited Company or is there any eligibility criteria required to be a director in a private limited company. Yes, there are certain conditions required to be fulfilled as prescribed in Companies Act, 2013 that may qualify or disqualify you to be director in any company.

Let us understand the same, in a purview of who is expressly barred from becoming a director in any company.

Here is the glimpse of the conditions for those who cannot be director in any company:

  • If the person is of unsound mind i.e. any person who is incapable of making decisions or has stable mental faculties and same can be declared by competent court also, that person is not eligible for becoming director in any company.

  • If he is already an undischarged insolvent or even if he has applied for insolvency case and same is pending before competent authority, then the person is not eligible to become director in any company.

  • If he has sentenced imprisonment (jail) by court for not less than 6 Months, then he can become director after completion of 5 year from the date of imprisonment given by court. But if a person sentenced imprisonment for 7 Years or more then the person is not allowed to become director in any company in any case.

  • If an order disqualifying him for appointment as director is passed or is in force by any court or tribunal, then the person cannot become director in any company.

  • If he, either severally or jointly has not paid called up money of shares and 6 Month time has been passed (over) from the last date fixed for payment by company, this also attracts disqualification of director.

  • If he has sentenced guilty by court in the crime of dealing with related party i.e.(their relatives) at any time in last 5 years. In simple words, if any person is already a director in any company, and he does any activity which in constraint to section 188(Related Party Transaction) of Companies Act, 2013 in last 5 year and convicted by court, then he is not eligible to become director in any company.

  • If he has not follow section 152(3) of the Indian Companies Act 2013.Section 152(3) states that no person can be appoint as a director, if he has been not having Director Identification Number. So before giving effect to the appointment of director, one must assure he has a valid DIN number.

Director in private limited company

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Apart from above disqualification, there are certain duties that an existing director has to fulfill, if same is not fulfilled that also attracts disqualification, such as:

  • If a person has not submitted financial statement or annual returns for continuously for 3 years.

  • If he has failed to repay deposits (unsecured loan)or interest thereon taken.

  • If he has failed to redeem debentures on due date or failed to pay interest on debenture due on them.

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The above are the predefined disqualification as prescribed in the companies act. Apart from above disqualification, companies can also add desired disqualification in their Article of Association.

In case any person falls under purview of any of the disqualification he is barred from becoming a Director, Further in all other conditions the person is eligible subject to fulfillment of below condition:

The director must be a natural person. Must have completed age of maturity i.e 18 years of age.

There is no bar over the nationality of the director. A foreign national may be a director in a company.

But yes, in any case there must be one resident director.