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The articles of a public company are silent on share qualification. X holds a Director Identification Number, is not disqualified and holds no shares in the company. X is proposed for appointment as…

Question and options

The articles of a public company are silent on share qualification. X holds a Director Identification Number, is not disqualified and holds no shares in the company. X is proposed for appointment as a director. Under the Companies Act, 2013, what is the position?

  1. X may not be appointed until X acquires at least one share

  2. X may be appointed only if the members pass a special resolution

  3. X may be appointed but must acquire one share within two months

  4. X may be appointed without holding any share

Answer and explanation

Correct answer: D - X may be appointed without holding any share

The Companies Act, 2013 lays down no share qualification for directors; a requirement to hold qualification shares can come only from the company's articles, which here are silent. The rule that a director must obtain qualification shares within two months of appointment belonged to section 270 of the repealed Companies Act, 1956, and applied only where the articles required such shares. Appointment of a director is ordinarily by ordinary resolution under section 152, not special resolution.

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