Can shareholders of a private company become directors of the same company?

Question

Can shareholders of a private company become directors of the same company?

Answer 1

yes, happens all of the time

Answer 2

Yes. In a Pvt. Ltd. company an individual can be a Director and Shareholder at the same time.

Answer 3

Yes, by all means and Yes not only for a Private company but also for a Public Company. There is no prohibition in the governing Law and the governing Act rather supports the provisions for directors of a company to be its shareholders as well.

For your information, the Articles of Association of a company may also prescribe for compulsorily holding a certain amount of shares of the company as a "qualification" to continue as a director in such company! And in case such condition is prescribed in the Articles of the Company, then a director compulsorily has to keep holding shares in his / her name in the company during all the time he / she continues as the Director in that company. Otherwise, he / she automatically deemed to have vacated his / her office in the company as its director.

Sections 270, 272, 273 and 283 of the Companies Act, 1956 clearly explain the situations as to qualification share holding by a director.

Answer 4

if you are talking about legal perspective. then yes.

because share holders are the owners of that compnay and thats why they receive profits(dividends).

And if you purchase these shares in bulk then ofcourse you can become the member of its board of directors.

But being a private compnay people would not sell so many shares to you.