Pawan, carrying 5.23% shares of Combo Ltd., a listed company, was offered directorship in the company. What will be the consequences of accepting the offer on his holdings?

According to Section 184 of the Companies Act, 2013 and Rule 9 of the Companies (Meetings of Board and its Powers) Rules, 2014, every Director shall at the first meeting of the Board in which he participates as a Director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, by giving a notice in writing in Form MBP 1. Regulation 7 (1) of SEBI (Prohibition of Insider Trading) Regulations, 2015 provides that every person on appointment as a Key Managerial Personnel or a Director of the Company or upon becoming a promoter shall disclose his holding of securities of the company as on the date of appointment or becoming a promoter, to the company within seven days of such appointment or becoming a promoter. Thus, Mr. Pawan shall disclose his shareholding under above laws and regulations in the Combo Ltd on accepting the offer of Directorship.