Edge Ltd. was incorporated in November, 2021 in Odisha with the objective of manufacturing water purifier. The plant was commissioned in May, 2022 at a cost of ₹400 crore. It was financed partly by the promoters (80%) an
CS Executive · Company Law and Practice · PYQS · June 2025
Edge Ltd. was incorporated in November, 2021 in Odisha with the objective of manufacturing water purifier. The plant was commissioned in May, 2022 at a cost of ₹400 crore. It was financed partly by the promoters (80%) and balance from bank loan. Currently, Edge Ltd. is not a listed company but plans to get listed in next year. Over a period of time, Edge Ltd. has evolved to become one of India's top ten manufacturer of water purifier and is also eyeing to have a share in the export market. It won an award in an all India based trade fair organised by a Chamber of Commerce. The company has now 300 members. The Board consists of ten directors. Case II: Due to diversification and expansion of activities, the board desires to increase the number of directors. In their last meeting, it appointed following two persons as directors: (a) Amit - He holds directorship in eleven companies including ten public companies. He is a whole-time Chartered Accountant in practice. (b) Romit - He holds directorship in eight public companies including managing directorship in one and other directorship in seven companies. In addition, he also holds alternate directorship in three private companies. Based on the above facts and integrated case, answer the following referring to the provisions of Companies Act, 2013: (b) Analyse the validity of the appointment of Amit and Romit as directors in Edge Ltd.
Answer & Explanation:
As per section 165(1) of the Companies Act, 2013, no person shall hold office as director including any alternate directorship, in more than 20 companies at the same time. Out of limit of 20, the maximum number of public companies in which a person can be appointed as director shall not exceed 10. Private companies that are either holding or subsidiary of a public company shall be included in reckoning the limit of public companies in which a person can be appointed as director. In the instant case Amit was appointed as director in Edge Ltd. He was already holding directorship in eleven companies including ten public companies. He is a whole-time Chartered Accountant in practice. As he is already a director in ten public companies, his appointment in Edge Ltd. is not valid as it will lead to his directorship in eleven public companies. In this case Romit holds directorship in eight public companies including managing directorship in one company and other directorship in seven companies. In addition, he also holds alternate directorship in three private companies. Hence, total holding of directorship in companies is 11 (8 public +3 Private) which is valid. Hence, Romit can be appointed as director in Edge Ltd.
Topics: Appointment and Qualification of Directors
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