Minimum Members & Directors Required for a Public Company

There are many legal and compliance procedures involved when you plan to incorporate your public company in India under the Companies Act 2013. One of the first things that the promoter of such companies needs to know is the minimum number of members and directors necessary to form and run the public company.

A public company differs from a private company on many levels, including the minimum number of members and directors required in the company.

In this blog post, we will help you get all your answers about the minimum number of members and directors in a public company.

Table of Contents

What is a Public Company?

The public company is the one which is not the private company and has the capacity to collect capital from the public, subject to the relevant provisions of the Companies Act, 2013 and securities law.

The public company can either be listed or unlisted. Thus, every public company does not automatically become the listed company.

There are some special provisions for the public company vis-a-vis the private company.

Minimum Members Required for a Public Company

Under Section 3 of the Companies Act, 2013, a public company must have a minimum of 7 members.

Therefore:

Minimum members in a public company = 7

These members can be individuals or legal entities, subject to the applicable legal requirements.

For example, if three promoters want to incorporate a public company, they cannot incorporate it with only three members. They would need to have at least seven members.

The seven members are the shareholders of the company and collectively form its membership base.

Can the number of members fall below 7 after incorporation?

A company should maintain the statutory minimum number of members. If the number of members falls below the required minimum and the company continues business for more than the prescribed period, the consequences under the Companies Act may apply.

Therefore, the company should monitor its shareholding structure and ensure that the minimum statutory requirement is maintained.

Minimum Directors Required for a Public Company

A public company must have at least 3 directors under Section 149 of the Companies Act, 2013.

Therefore:

Minimum directors in a public company = 3

For comparison:

Type of Company	Minimum Members	Minimum Directors
Private Company	2	2
Public Company	7	3
One Person Company	1	1

Thus, a public company cannot generally be incorporated with only one or two directors.

The directors are responsible for managing the company’s affairs and taking decisions in accordance with the Companies Act, the company’s Articles of Association and other applicable laws.

Maximum Number of Directors

There is a limit of 15 directors that a company can have without passing a special resolution.

In case the company intends to have more than 15 directors, then the company may pass a special resolution for the purpose.

Hence:

Minimum number of directors: 3
Maximum number of directors without a special resolution: 15
More than 15 directors: It will be possible on passing of a special resolution.

Other relevant conditions concerning directors need to be fulfilled as well.

Resident Director Requirement

Apart from having at least three directors, a public company is required to have at least one director who has stayed in India for not less than 182 days during the financial year, subject to the applicable provisions of the Companies Act.

This is commonly referred to as the resident director requirement.

The requirement ensures that at least one director has a substantial presence in India and can participate in the company’s management and regulatory matters.

For a newly incorporated company, the requirement applies proportionately to the financial year in which the company is incorporated.

Woman Director Requirement

Public companies fall into certain categories in which it becomes mandatory to appoint at least one woman director on the board.

These requirements are placed on certain specified classes of companies, comprising certain listed companies and others who satisfy certain criteria related to the paid-up share capital or turnover.

It does not necessarily mean that all the public companies require the appointment of a woman director just because they are public companies.

Can a Public Company Have Only Three Directors?

Yes.

A public company can have exactly three directors, provided it satisfies all other applicable requirements.

For example, a newly incorporated public company may have:

7 members
3 directors
At least 1 resident director

If the company falls within a prescribed category requiring a woman director, it must also comply with that requirement.

The Board can subsequently be expanded as the company’s operations grow.

Difference Between Members and Directors

Members and directors have different roles in a company.

Members

Members are the shareholders or owners of the company. They invest capital in the company and have rights attached to their shares.

Members generally exercise their powers through general meetings.

Directors

Directors are responsible for the management and administration of the company.

They collectively form the Board of Directors and make decisions relating to the company’s business and affairs.

For example, a public company may have:

7 members + 3 directors

The members and directors are not required to be the same number.

One person may also be both a member and a director, subject to the applicable legal requirements.

Key Compliance Requirements

Maintaining the minimum number of members and directors is only one part of public company compliance.

A public company should also ensure compliance with requirements relating to:

Appointment and resignation of directors
Director Identification Number (DIN)
Disclosure of interest by directors
Board meetings
General meetings
Annual General Meeting (AGM)
Annual filings with the Registrar of Companies
Maintenance of statutory registers and records
Financial statements and Board’s Report
Appointment of auditors
Related party transactions
Corporate governance requirements, wherever applicable

Listed public companies may have additional requirements under SEBI regulations and the applicable stock exchange framework.

Conclusion

For incorporating a public company in India, promoters should remember two important numbers:

Minimum Members: 7

Minimum Directors: 3

In addition, the company needs to consider requirements relating to a resident director, woman director where applicable, maximum number of directors and other corporate compliance requirements.

Right from the start, proper structuring of the business will assist promoters in avoiding compliance problems and ensure efficient functioning of the business corporation.

In case you are planning to register a public company or make an existing private company into a public one, professional assistance will be helpful in understanding the requirements and achieving MCA compliance.

FAQs

Q1. What is the minimum number of members required for a public company?

A public company must have at least 7 members under the Companies Act, 2013.

Q2. What is the minimum number of directors required?

A public company must have at least 3 directors.

Q3. Can a public company have only 3 directors?

Yes. Three directors are sufficient to meet the basic minimum requirement, subject to compliance with other applicable requirements.

Q4. What is the maximum number of directors a company can have?

A company can have up to 15 directors without passing a special resolution. More than 15 directors can be appointed after passing a special resolution.

Q5. Is a resident director mandatory for a public company?

Yes. A company must have at least one director who satisfies the prescribed resident-director requirement under the Companies Act.

Q6. Is a woman director mandatory for every public company?

No. The woman-director requirement applies to prescribed classes of companies. The company must check whether it falls within the specified criteria.

Q7. Can the same person be a member and director?

Yes. A person can be both a shareholder/member and a director, provided the applicable requirements are satisfied.

Q8. Is an unlisted public company required to have 7 members?

Yes. The minimum requirement of 7 members applies to a public company irrespective of whether it is listed or unlisted.

Q9. Can a public company have more than 15 directors?

Yes. It can appoint more than 15 directors after obtaining approval through a special resolution, subject to applicable legal requirements.

Q10. What happens if the number of members falls below the minimum?

The company should take appropriate steps to restore the statutory minimum. Continuing business with fewer than the prescribed minimum number of members can have legal consequences under the Companies Act.