Maximum Directorships an Individual Can Hold in India

We come across many people who are appointed as Directors in more than 50 companies. This blog makes an attempt to decode the maximum number of companies in which an individual can hold directorship.

The maximum number of companies in which a person can hold directorship is governed by Section 165 of Companies Act, 2013 (hereinafter referred to as the Act).

The Act clearly states that the maximum number of companies in which a person can hold directorship, including alternate directorship, is 20, out of which maximum 10 can be public limited companies. 

Further, in calculating the number of public companies, there shall be included private companies which are either holding or subsidiaries of such public companies.

Directorships in dormant companies are not to be included when calculating total directorships.

To make matters more strict, Securities Exchange Board of India, vide Regulation 17A of SEBI (LODR) Regulation, 2015, provides that a person shall not be a director in more than 7 listed entities with effect from April 1, 2020.

Further, SEBI has provided  that a person shall not serve as an Independent Director in more than 7 listed entities. 

Notwithstanding the above, any person who is serving as a Whole Time Director or Managing Director in any listed entity shall not serve as an independent director in more than 3 listed entities.

Listed entity, for this purpose, has been defined to mean companies whose equity shares are listed on a Stock Exchange.

Penalty under Companies Act: If a person accepts an appointment as a director in violation of section 165, he shall be liable to a penalty of Rs. 2,000/-  for each day after the first during which such violation continues, subject to a maximum of Rs. 2,00,000/-.