Qualification share

Sec 270 of company law provides that certain number of shares will have to be held by each director and that shares called qualification shares.He can obtain them before or after appointment. If he wants to get them after appointment , he has to obtain them before two month. If he fails to acquire these shares, he will suffer as vacant his ofice or liable to a penalty.

@Varun

Qualification shares (sec 270-273 of the Companies Act,1956.)

Points:

Share qaulification to be held by the director only if it is specifically required by the A/A.There is no specific requirement in the Act requiring the same.

Qualfication shares must be held with in two months from the date of appointment.

Any provision in the articles prescribing a period shorter than 2 months shall be void.

The nominal amount of qualification must not exceed Rs5000 or the nominal value of one share where it exceeds Rs 5000.

The Act does not specify that a director should obtain only equity shares as qaulification shares. So holding of  preference shares is valid. 

However, if the Articles require the director to hold a sepcific class of shares, then he should obtain that class of shares only.