• Deepak Sharma

Directors of a Nidhi Company: Eligibility and Tenure

As per Rule 17 of Nidhi Rules, 2014, any person who want to hold office of director of a Nidhi company shall comply with following conditions:

1. The Director shall be a member of Nidhi Company, it means if anyone want to hold office of director in a Nidhi Company must hold shares of such Nidhi and his name shall be entered in membership register as a member.

2. The Director of a Nidhi shall hold office for a term up to ten consecutive years on the Board of Nidhi.

3. The Director shall be eligible for re-appointment only after the expiration of two years of ceasing to be a Director.

4. Where the tenure of any Director in any case had already been extended by the Central Government, it shall terminate on expiry of such extended tenure.

5. The person to be appointed as a Director shall comply with the requirements of sub-section (4) of section 152 of the Act and shall not have been disqualified from appointment as provided in section 164 of the Act.

Section 152(4): (4) Every person proposed to be appointed as a director by the company in general meeting or otherwise, shall furnish his Director Identification Number 7[or such other number as may be prescribed under section 153] and a declaration that he is not disqualified to become a director under this Act.

Section 164: Disqualifications for Appointment of Director

(1) A person shall not be eligible for appointment as a director of a company, if —

(a) He is of unsound mind and stands so declared by a competent court;

(b) He is an undischarged insolvent;

(c) He has applied to be adjudicated as an insolvent and his application is pending;

(d) He has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence:

(Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director in any company)

(e) An order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;

(f) He has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;

(g) He has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or

(h) He has not complied with sub-section (3) of section 152.

(i) He has not complied with the provisions of sub-section (1) of section 165.

(2) No person who is or has been a director of a company which—

(a) Has not filed financial statements or annual returns for any continuous period of three financial years; or

(b) Has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more,

Shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.]

2[Provided that where a person is appointed as a director of a company which is in default of clause (a) or clause (b), he shall not incur the disqualification for a period of six months from the date of his appointment.]


All other provisions of Companis Act, 2013 and rules will be applicable asapplied on other limited company.

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Tags: How to appoint a director in Nidhi Company, Appointment of director in Nidhi Company, How to appoint a director in Nidhi, Tenure of director of a Nidhi company.

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