Adding a New Director to Our Board: Is It Necessary to Offer Company Shares?

Dear All,

I am working in a Pvt Ltd company with a team of around 20-30 employees. I have a query regarding adding a new member to the board of directors. Is it mandatory to give company shares to every new director added to the board? Can we appoint a director without giving them company shares?

It is not mandatory to give the shares to each and every director of the company. There are many directors who are not shareholders of the company.

As per the Companies Act, 2013, the requirement of Qualification shares is dispensed with. Currently, every company is regulated under the new Companies Act, 2013. Therefore, even if the Articles of the company have share qualification, they can now appoint a Director without holding any shares. However, various other rules need to be followed in connection with this if the person is to be appointed directly as Director. For instance, a deposit amount of Rs.1,00,000/- (as per company rules) needs to be followed.