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Share Qualification of Directors of a Company in India

Provisions under the present Companies Act 2013

The Companies Act does not have any specific provisions for holding qualification shares by directors. Apparently, it has been removed in toto.

Provisions under the erstwhile Companies Act 1956

The articles of a company may require the directors of that company to hold some minimum shares at the time of their appointment. This holding of minimum shares is called as 'share qualification of directors'.

Time limit (Section 270): If the Director already doesn't hold that share qualification at the time of his appointment, then he must acquire them within 2 months after his appointment as a director.

The subscribers to the memorandum are deemed as the first directors of the company and are not required to hold the share qualification unless the articles so requires.

Maximum value: The nominal value of the qualification shares shall not exceed Rs. 5,000, or the nominal value of one share where it exceeds Rs. 5,000/-.

Share warrants value is not included while determining the share qualification.

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