Frequently Asked Questions
What is the minimum number of directors required under the Companies Act 2013?▼
Under Section 149 of the Companies Act 2013, the minimum number of directors required is 3 for Private Limited and Public Limited companies. For OPC (One Person Company), only 1 director is required. The board should maintain adequate diversity and expertise to guide the company effectively.
What are the independent director requirements for listed companies?▼
As per SEBI LODR Regulation 17 and Section 149(4) of Companies Act 2013, listed companies must have at least 1/3rd of their board strength as independent directors. An independent director is someone who is not a managing director or CEO and doesn't have any material relationship with the company for the past two financial years.
Is it mandatory to have a woman director on the board?▼
Yes, as per Rule 3 of Companies (Appointment and Qualification of Directors) Rules 2014, all companies must have at least one woman director. This requirement applies to private, public, and listed companies with 3 or more directors. The woman director should meet the same qualifications as other directors.
What are Key Managerial Personnel (KMP) requirements?▼
Under Section 203 of Companies Act 2013, every company must appoint: (1) Company Secretary, (2) Chief Financial Officer (CFO), and (3) Chief Executive Officer or Managing Director. These positions are mandatory for compliance. A qualified professional must fill each position as per regulatory guidelines.
Which statutory committees must every company have?▼
The mandatory committees depend on company type: All companies need an Audit Committee. Listed and Public Unlisted companies need Nomination & Remuneration Committee and Stakeholders Relationship Committee. Companies with CSR applicability must have a CSR Committee. The composition and working of these committees are strictly regulated.
What are the consequences of board composition non-compliance?▼
Non-compliance with board composition requirements can result in significant penalties ranging from ₹1 lakh to ₹5 lakhs for various violations under the Companies Act 2013. Additionally, penalties under SEBI LODR for listed companies can be up to ₹5 crores. The company and its officers may face criminal prosecution, suspension of listing privileges, and reputational damage.
