Sections 164 and 165 of Companies Act 2013: Director Disqualification and Number of Directorships
Sections 164 and 165 of the Companies Act, 2013 regulate two connected aspects of company management: when a person is disqualified from appointment as a director and how many companies a person may serve as director at the same time.
Updated: 17 September 2026
- Section 164 specifies personal and company-default related grounds of disqualification for appointment as director.
- Section 165 generally limits a person to directorships in 20 companies at the same time, with a maximum of 10 public companies.
- For the 20-company limit, directorship in a dormant company is excluded.
- Contravention of Section 165 attracts the statutory monetary penalty provided in sub-section (6).
Section 164: Disqualifications for appointment of director
Meaning. Section 164 identifies circumstances in which a person is not eligible for appointment as a director. It covers personal disqualifications under sub-section (1), defaults by a company with which the person is or has been a director under sub-section (2), and the power of a private company to prescribe additional disqualifications in its articles under sub-section (3).
Personal disqualifications under Section 164(1)
A person is disqualified where the statutory conditions in Section 164(1) apply. In practical terms, the grounds include the following:
- the person is of unsound mind and has been so declared by a competent court;
- the person is an undischarged insolvent, or has applied to be adjudicated insolvent and the application is pending;
- the person has been convicted and sentenced to imprisonment for at least six months, and five years have not elapsed from expiry of the sentence;
- where imprisonment is for seven years or more, the person is not eligible to be appointed as director in any company;
- a court or Tribunal has passed an order disqualifying the person and that order remains in force;
- calls on shares of the company held by the person remain unpaid for six months after the last date fixed for payment;
- the person has, during the preceding five years, been convicted of an offence dealing with related party transactions under Section 188;
- the person has not complied with Section 152(3), which concerns the Director Identification Number requirement for appointment; or
- the person has not complied with Section 165(1), concerning the permitted number of directorships.
The statutory proviso to Section 164(3) provides that the disqualifications referred to in clauses (d), (e) and (g) of Section 164(1) continue to apply even where an appeal or petition has been filed against the conviction or disqualification order.
Company defaults under Section 164(2)
A person who is or has been a director of a company may attract the five-year disqualification under Section 164(2) where the company has not filed financial statements or annual returns for a continuous period of three financial years, or where specified failures involving deposits, debentures, interest or declared dividend continue for one year or more.
The proviso gives a newly appointed director of a company already in such default a six-month period from the date of appointment before the disqualification is incurred.
Additional grounds for private companies
Section 164(3) permits a private company, through its articles, to prescribe additional disqualifications for appointment as director beyond those stated in sub-sections (1) and (2).
Section 165: Number of directorships
Meaning. Section 165 fixes the maximum number of companies in which one person may simultaneously hold office as a director, including alternate directorships.
| Rule | Statutory position |
|---|---|
| Total directorships | Not more than 20 companies at the same time. |
| Public companies | Not more than 10 public companies. |
| Private holding or subsidiary company of a public company | Included while calculating the limit of public-company directorships. |
| Dormant company | Excluded when calculating the overall limit of 20 directorships. |
| Lower limit | A company may, by special resolution and subject to Section 165(1), specify a lower number of companies in which its director may act as director. |
Penalty for violation
Under Section 165(6), a person who accepts an appointment as director in violation of Section 165 is liable to a penalty of Rs. 2,000 for each day after the first day during which the violation continues, subject to a maximum of Rs. 2,00,000.
Legislative updates reflected on this page
The page reflects the significant amendments already incorporated into Sections 164 and 165, including the six-month protection for a newly appointed director of a defaulting company, the continuing effect of specified disqualifications despite an appeal or petition, exclusion of dormant-company directorships from the overall count, and the substituted penalty provision in Section 165(6).
Official statutory resources
For the authoritative statutory text and later notifications or amendments, refer to the Ministry of Corporate Affairs - Companies Act, 2013 and India Code. These official sources should be checked where a transaction or compliance decision depends on the law in force on a particular date.
Related Companies Act provisions
Director disqualification and directorship limits operate alongside provisions dealing with appointment, duties, vacation of office, resignation, removal, Board meetings and related party transactions. The related links in the sidebar provide continuity with those provisions.