A person shall not be capable of being appointed director of a company by the articles, unless before the registration of the articles, the publication of the prospectus, or the filing of the statement in lieu of prospectus, as the case may be , he has, by himself or by his agent authorised in writing
(a) signed and filed with the Registrar a consent in writing to act as such director; and
(b) either ;-
signed the memorandum for shares not being less in number or value than that of his qualification shares, if any, or
taken his qualification shares, if any, from the company and paid or agreed to pay for them; or
signed and filed with the Registrar and undertaking in writing to take from the company his qualification shares, if any, and pay for them; or
made and filed with the Registrar an affidavit to the effect that shares, not being less in number or value than that of his qualification shares, if any, are registered in his name.
Qualification shares are the minimum number of shares a person must own, as provided in the articles of the company, in order to qualify to become a director of the company. Qualification shares must be acquired by a director within 2 months of his appointment. The articles cannot require a director to acquire qualification shares within a shorter period. The face value of the qualification shares cannot exceed five thousand rupees, or if the face value of one share is more than five thousand rupees, then the qualification share will be one qualification share.
Every director, not being a technical director of a director appointed, by the Central or a State Government, shall within two months after his appointment file with the company a declaration specifying the qualification shares held by him. 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.
The above provisions do not apply to-
(a)a company not having a share capital;
(b)a private company;
(c)a company which was a private company before becoming a public company; or
(d)a prospectus issued by or on behalf of a company after the expiry of one year from the date on which the company was entitled to commence business.