Private limited company director as employee to other compan

Hi Dileep,

You can be a director in a Private limited company even if you are in employment with some other Pvt. Ltd. Company. 

Section 164 of Company Act 2013 provides Disqualification for appointment of director.which is as follow.

The Companies Act, 2013 Sec 164-Disqualifications of directors

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.

(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.

(3) A private company may by its articles provide for any disqualifications for appointment as a director in addition to those specified in sub-sections (1) and (2):

Provided that the disqualifications referred to in clauses (d), (e) and (g) of sub-section (1) shall not take effect—

(i) for thirty days from the date of conviction or order of disqualification;

(ii) where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting in sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed off; or

(iii) where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed off.

Thus if you donot fall into any of the above disqualification, you can surely open a new private limited company in which you can also be director along with your wife.

Regards

CS LL.B Naman Gandhi

+919871732281

Hi JLS and Naman Gandhi,

Thank you for your suggestions. However my company has a clause in its 'Terms and Conditions of Employment. Does this restrict me to start my company?

a. During working hours, you shall use your best energies and abilities to serve the company faithfully. You shall comply with the rules, regulations and procedures as notified by the Company in letter and spirit.

b. During working hours, you shall entirely devote your time, attention and abilities to the business of the Company.

c. You shall not, without the company’s prior written consent, be in any way directly or indirectly engaged in concerned with any other business or employment during or outside your hours of work in the company. You shall however, undertake honorary work of social or charitable nature, literary, artistic or scientific character only with the express permission from the competent authority.

d. During your employment, you shall not directly or indirectly engage in any conduct averse to the best interests of the company. Also, you shall not divulge any confidential information or violate any agreement with your prior employers or their clients.