Minimum number of Directors in case of a public company is __________a...
The correct answer is option 'C': 3.
Public companies are required to have a minimum number of directors to ensure effective governance and decision-making. These directors are responsible for overseeing the company's operations and making important decisions on behalf of the shareholders.
Here are the reasons why the minimum number of directors in case of a public company is 3:
1. Legal Requirement:
- The Companies Act, 2013 in India mandates that a public company must have a minimum of three directors.
- Section 149(1) of the Act states that every public company shall have a minimum number of three directors.
2. Distribution of Responsibilities:
- Having at least three directors allows for the distribution of responsibilities and decision-making among a group of individuals.
- This ensures that no single director has excessive control or influence over the company's affairs.
3. Independent Directors:
- The Act requires that at least one-third of the total directors be independent directors.
- Independent directors are individuals who are not related to the company and do not have any material or pecuniary relationship with the company.
- They bring objectivity and independent judgment to the board's decision-making process.
- Having a minimum of three directors allows for the inclusion of independent directors in the board.
4. Board Committees:
- Public companies often have various board committees such as audit committee, nomination and remuneration committee, etc.
- These committees require a certain number of directors to be formed effectively.
- With a minimum of three directors, these committees can be constituted and function efficiently.
5. Quorum for Board Meetings:
- Quorum refers to the minimum number of directors required to be present at a board meeting for it to be valid and have the power to make decisions.
- The Act specifies that the quorum for a board meeting of a public company shall be one-third of the total strength of the board or two directors, whichever is higher.
- With a minimum of three directors, the quorum requirement can be met even if one director is absent.
In conclusion, the minimum number of directors in case of a public company is three. This requirement ensures proper governance, distribution of responsibilities, inclusion of independent directors, formation of board committees, and fulfillment of quorum requirements.