Restrictions on Appointment or Advertisement of Director

Restrictions on Appointment or Advertisement of Director (Sec. 266)

A person shall not be capable of being appointed director of a company by the articles, unless before the registration of the articles, the publication of the prospectus, or the filing of the statement in lieu of prospectus, as the case may be , he has, by himself or by his agent authorized in writing

(a) Signed and filed with the Registrar a consent in writing to act as such director; and

(b) Either

i. Signed the memorandum for shares not being less in number or value than that of his qualification shares, if any, or

ii. Taken his qualification shares, if any, from the company and paid or agreed to pay for them; or

iii. Signed and filed with the Registrar and undertaking in writing to take from the company his qualification shares, if any, and pay for them; or

iv. Made and filed with the Registrar an affidavit to the effect that shares, not being less in number or value than that of his qualification shares, if any, are registered in his name.



Qualification shares are the minimum number of shares a person must own, as provided in the articles of the company, in order to qualify to become a director of the company. A director must acquire qualification shares within 2 months of his appointment. The articles cannot require a director to acquire qualification shares within a shorter period. The face value of the qualification shares cannot exceed five thousand rupees, or if the face value of one share is more than five thousand rupees, then the qualification share will be one qualification share.