Companies appoint directors to manage the affairs of the company and oversee key decisions. The size of the board may vary across companies, but the number of directors is regulated under the Companies Act, 2013. The Act prescribes a maximum limit on the number of directors. A company cannot exceed this limit unless it follows the prescribed process and obtains shareholder approval.
The process also involves disclosure obligations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for listed companies.
Board Size under the Companies Act, 2013
The maximum number of directors is governed by Section 149(1)(b) of the Companies Act, 2013. A company can appoint up to 15 directors on its board. This limit applies unless it is increased through shareholder approval. A company may need more directors due to governance needs or regulatory requirements, but once the board reaches 15 directors, no further appointments can be made unless the limit is increased.
The law allows this limit to be increased. But it requires approval through a Special Resolution passed by shareholders. No approval from the Central Government is required. The decision rests with the shareholders.
Board Composition Requirements for Listed Companies
Listed companies must comply with board composition requirements under SEBI LODR Regulations, 2015. These prescribe specific categories of directors. Companies are required to appoint:
- At least one woman director
- A prescribed number of independent directors
These requirements are set out under Regulation 17 of SEBI LODR.
In some cases, the board may already have 15 directors. But additional appointments may be required to meet these norms. In such cases, the company must first increase the maximum number of directors.
SEBI LODR Compliance for Listed Companies
Increasing the maximum number of directors is not only a Companies Act process. It also triggers disclosure obligations under SEBI LODR Regulations.
The requirement operates at multiple stages. Each stage creates a separate disclosure trigger.
Board Level (Initial Trigger): Once the board approves the proposal, the company must disclose the outcome under Regulation 30 of SEBI LODR. The disclosure includes the proposal to increase the maximum number of directors, details of the general meeting notice, and any alteration of the Articles, if applicable.
Shareholder Level (Approval Stage): After the general meeting, the company must disclose the voting results, the outcome of the meeting, and the approval of the revised board limit.
Post-Approval (Appointment Stage): When new directors are appointed, fresh disclosures are required under Regulation 30.
This creates multiple disclosure points for a single compliance action. Companies must align the Companies Act approvals, ROC filings and stock exchange disclosures. Any delay or mismatch may lead to compliance gaps.
Corporate Procedure for Increasing the Director Limit
The increase in the maximum number of directors follows a structured process.
Step 1: Review of Articles of Association
The company should first review its Articles of Association (AOA). Some companies specify the maximum number of directors in their Articles. If the Articles already allow a higher number, the company can proceed with shareholder approval. But if the Articles restrict the number, they must be amended first. Alteration of Articles is governed by Section 14 of the Companies Act, 2013. This requires a Special Resolution and filing of Form MGT-14 with the Registrar of Companies.
Step 2: Board Meeting
The process begins with a Board Meeting under Section 173 of the Companies Act, 2013, where the Board approves the proposal to increase the limit on the number of directors. This includes approving any necessary alteration to the Articles of Association, the draft notice of the general meeting, the special resolution, and authorisation for required filings and disclosures. At the same time, the proposed changes must ensure that the Board composition remains compliant with Regulation 17 of the SEBI (LODR) Regulations.
Step 3: Intimation to Stock Exchanges
After the board meeting, listed companies must inform the stock exchanges. Disclosure is made under Regulation 30 of SEBI LODR. The disclosure generally includes a proposal to increase the limit, Details of the general meeting and Alteration of Articles, if any. This must be submitted within the prescribed timeline.
Step 4: Notice of General Meeting
The company must send a notice of the general meeting to shareholders in accordance with Section 101 of the Companies Act, 2013 and Regulation 36 of the SEBI (LODR) Regulations, ensuring that it is circulated at least 21 clear days in advance. The notice should include the special resolution, an explanatory statement under Section 102, and details of the existing and proposed limit of directors, for instance, an increase from 15 to 20 directors.
Step 5: Shareholders’ Approval
The proposal is placed before shareholders in the general meeting. Approval must be obtained through a Special Resolution under Section 149(1)(b). If the Articles are also amended, a Special Resolution under Section 14 is required. Once approved, the company can have more than 15 directors.
Step 6: Filing with the Registrar of Companies
The company must file Form MGT-14 within 30 days of passing the resolution, as required under Section 117 of the Companies Act, 2013. The filing includes a certified copy of the special resolution, the notice of the general meeting, the explanatory statement, and the altered Articles of Association, if applicable. Once filed, the revised limit becomes part of the company’s official records.
Step 7: Stock Exchange Disclosure after the General Meeting
Listed companies must also disclose the outcome of the general meeting to stock exchanges under Regulation 30 of SEBI LODR. This includes the voting results of the special resolution, the outcome of the general meeting, and any changes in the board structure or governance framework.
Step 8: Appointment of Additional Directors
After increasing the limit, the company may appoint new directors. Appointments are made under Section 152 or Section 161 of the Companies Act, 2013. The company must file Form DIR-12 within 30 days of appointment. The appointment must also be disclosed to stock exchanges under Regulation 30.
Common Compliance Risks
Companies may face issues if steps are missed or out of sequence. Key risks include:
- Appointing directors beyond 15 without Special Resolution – Such appointments are non-compliant.
- Delay in filing MGT-14 – Must be filed within 30 days of passing the resolution.
- AOA mismatch with approved limit – Articles must permit the increase in director limit.
- Incomplete disclosure under Regulation 30 – Delays or gaps may attract regulatory scrutiny.
- Governance non-compliance due to board cap – May impact compliance with SEBI board composition requirements.
Proper sequencing, timely filings and accurate disclosures are essential.
Increasing the maximum limit of directors is a straightforward process in principle, but it requires careful coordination across company law approvals and SEBI disclosure requirements. For listed companies, the focus is not just on obtaining shareholder approval, but on ensuring that each step from board approval to final appointment is properly sequenced, disclosed, and documented. A structured approach helps avoid compliance gaps and ensures that governance requirements are met without regulatory risk.