If, after the expiry of the said period of two months, any person acts as a director of the company when he does not hold the qualification shares, he shall be punishable with the fine which may extend to fifty rupees for every day between such expiry and the last day on which he acted as a director.
In conclusion, a director does not have to hold shares in a company in order to be its director. Rather, a director can choose to become a shareholder. However, this is dependent on the company’s constitution.
However, not all directors’ own shares, nor it is workable for every shareholder to run the company. Hence delegation of work among members and owners is important. So the directors are appointed to manage the company. At the time of incorporation of the company, it is easier to own and manage the company.
A Non-Stock Corporation is basically a corporation that does not issue shares of stock. It can be formed as either a for-profit or non-profit corporation. Since the Non-Stock Corporation has no shareholders, it is owned by its members – meaning a member-owned corporation that does not issue shares of stock.
Companies limited by guarantee
In a company limited by guarantee, there are no shares – hence there are no shareholders. Instead, the company will have ‘members’.
What qualifications do you need to be a director of a company?
To become a director of the company there is no specified age limit. However, sec 157 of the company act provides minimum age to be 21 years. Any person with less than 21 years of age cannot become the company’s head. Doing so will lead to the end of its directorship session.
Are private companies easy to set up?
Private companies are relatively easy to set up and not too difficult to maintain. As a result, proprietary limited companies are the most common type of company in Australia.
The shareholders are the most powerful body in the company and in general controls the composition of the Board of Directors of the company. The decisions by the shareholders are taken by passing resolutions in the shareholder’s meeting.
Generally it is the shareholders that hold the power in the company with the directors being responsible for its day to day running. In most successful companies the directors and shareholders work closely together and are open and transparent about the actions and direction the company will take.
Who can be appointed as a director?
According to the Companies Act, only an individual can be appointed as a member of the board of directors. Usually, the appointment of directors is done by shareholders. A company, association, a legal firm with an artificial legal personality cannot be appointed as a director. It has to be a real person.
A shareholder is any person, company, or institution that owns shares in a company’s stock. A company shareholder can hold as little as one share. Shareholders are subject to capital gains (or losses) and/or dividend payments as residual claimants on a firm’s profits.
Is a director of a company an owner?
Shareholders and directors have two completely different roles in a company. The shareholders (also called members) own the company by owning its shares and the directors manage it.
Commonly, and by law in many states, a corporation will have at least three officers: (1) a president, (2) a treasurer or chief financial officer, and (3) a secretary. Officers do not have to be shareholders or directors, but they can be.