Section 165 of CA 2013 : Section 165: Number Of Directorships

Explanation using Example

Imagine a business professional, Mr. Sharma, who is a well-known expert in the corporate world. He is currently serving as a director in 22 companies, including 12 public companies and 10 private companies. With the commencement of the Companies Act, 2013, he learns about Section 165, which limits the number of directorships a person can hold.

Understanding the new law, Mr. Sharma decides to take action to comply with Section 165. He evaluates all his current positions and decides to resign from 2 public companies and 2 private companies to meet the maximum limit of 20 companies. Moreover, to comply with the provision that he cannot be a director in more than 10 public companies, he resigns from additional 2 public companies where he feels his contribution is least significant.

After making his decisions, Mr. Sharma sends out his resignation letters to the respective companies, making sure his resignations become effective immediately upon dispatch. He also informs the Registrar of Companies about his choice and the changes in his directorships, as required by the Act.

Mr. Sharma's proactive approach ensures that he avoids the penalties that could accrue for each day he remained in violation of Section 165, which could have amounted to a significant sum had he not complied in time.