Chapter XI - Appointment and Qualifications of Directors

Section 165

Section 165: number of directorships

A person may not hold office as a director, including any alternate directorship, in more than twenty companies at the same time. Not more than ten of them may be public companies.

Official text

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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.

Statutory text

Bare law

(1) No person, after the commencement of this Act, shall hold office as a director, including any alternate directorship, in more than twenty companies at the same time: Provided that the maximum number of public companies in which a person can be appointed as a director shall not exceed ten. Explanation I.—For reckoning the limit of public companies in which a person can be appointed as director, directorship in private companies that are either holding or subsidiary company of a public company shall be included. Explanation II.—For reckoning the limit of directorships of twenty companies, the directorship in a dormant company shall not be included. (2) Subject to the provisions of sub-section (1), the members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as directors. (3) Any person holding office as director in companies more than the limits as specified in sub-section (1), immediately before the commencement of this Act shall, within a period of one year from such commencement,— (a) choose not more than the specified limit of those companies, as companies in which he wishes to continue to hold the office of director; (b) resign his office as director in the other remaining companies; and (c) intimate the choice made by him under clause (a), to each of the companies in which he was holding the office of director before such commencement and to the Registrar having jurisdiction in respect of each such company. (4) Any resignation made in pursuance of clause (b) of sub-section (3) shall become effective immediately on the despatch thereof to the company concerned. (5) No such person shall act as director in more than the specified number of companies,— (a) after despatching the resignation of his office as director or non-executive director thereof, in pursuance of clause (b) of sub-section (3); or (b) after the expiry of one year from the commencement of this Act, whichever is earlier. (6) If a person accepts an appointment as a director in violation of this section, he shall be liable to a penalty of two thousand rupees for each day after the first during which such violation continues, subject to a maximum of two lakh rupees.

Introduction

Directorships in private companies that are holding or subsidiary companies of a public company count towards the ten-public-company limit (Explanation I). Since 9 February 2018, Explanation II excludes directorships in dormant companies from the twenty-company count.

Members may set a lower limit by special resolution. Subsections (3) to (5) gave directors who exceeded the limit when the Act commenced one year to choose which companies to keep and to resign from the rest. Since 21 December 2020, accepting an appointment in violation of the section attracts a penalty of two thousand rupees for each day after the first, up to two lakh rupees.

Key takeaways

Twenty and ten

Twenty directorships in total, including alternate directorships, of which no more than ten may be public companies.

Counting rules

Private holding or subsidiary companies of a public company count towards the public limit. Dormant companies are excluded from the twenty.

Consequences

A daily penalty applies under subsection (6). Non-compliance with subsection (1) is also a disqualification under section 164(1)(i).

Count current directorships

List every company in which the person holds office as director, including alternate directorships. Count all of them against the twenty-company limit, but leave out dormant companies under Explanation II. Explanation II was inserted by section 53 of the Companies (Amendment) Act, 2017, in force from 9 February 2018.

Separately count public companies against the ten-company limit. Include private companies that are holding or subsidiary companies of a public company, as Explanation I requires.

Apply company-specific limits

Under subsection (2), members of a company may specify a lower number of companies in which its directors may act, by special resolution. Check the company's resolutions before accepting a new appointment.

Understand the penalty and the link to disqualification

The current subsection (6) was substituted by section 33 of the Companies (Amendment) Act, 2020, from 21 December 2020. A person who accepts an appointment in violation of the section is liable to a penalty of two thousand rupees for each day after the first during which the violation continues, up to two lakh rupees. It replaced an earlier version that the Companies (Amendment) Act, 2019 had already amended.

Section 164(1)(i) makes a person who has not complied with section 165(1) ineligible for appointment as a director.

Check class-specific exemptions

The MCA e-book for the Act lists an exemption notification under this section for Section 8 companies. Read the current notification before applying the general rule to those companies.

MCA e-book — Companies Act, 2013 (exceptions, modifications and adaptations)

Practical preparation

List all directorships, including alternate ones; exclude dormant companies from the twenty-company count; count public companies and their private holding or subsidiary companies against the ten-company limit; check any lower limit set by special resolution; decline or resign before accepting an appointment above the limit.

Practical checklist

Do

Keep an up-to-date list of all directorships, showing whether each company is public, private or dormant.
Check members' resolutions for a lower limit.

Avoid

Do not leave out alternate directorships.
Do not treat a private company as outside the public limit if it is a holding or subsidiary company of a public company.

Illustrative example

Hypothetical: a twenty-first board seat

A director holds twenty directorships, two of them in dormant companies, and is offered a seat on a private company board.

Exclude
Leave out the two dormant companies, which leaves eighteen directorships counted.
Check the public limit
Confirm that the public-company count, including private holding or subsidiary companies of public companies, stays at ten or fewer.
Check resolutions
Confirm that no company has set a lower limit by special resolution.

Outcome

The new seat would bring the counted total to nineteen, within the twenty-company limit, provided the public-company limit and any lower limits are respected.

Glossary

Alternate directorship: Office as an alternate director, which counts towards the limit in section 165(1).
Dormant company: A company with dormant status under section 455. Explanation II excludes its directorships from the twenty-company count.

Frequently asked questions

Do alternate directorships count?

Yes. Section 165(1) expressly includes any alternate directorship.

Do dormant company directorships count?

Not towards the twenty-company limit, under Explanation II, in force from 9 February 2018.

What is the penalty for exceeding the limit?

Two thousand rupees for each day after the first during which the violation continues, up to two lakh rupees. This has applied since 21 December 2020.

Need help applying this provision to your situation?

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Last updated 11 October 2026

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