According to Section 3 of the Indian Majority Act, 1785, a minor is a
person who has not attained the age of eighteen years.
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The Indian Contract Act, 1872 prohibits a minor from entering into an
agreement. However, nothing in this Act debars a minor from becoming a
beneficiary or a promise under a contract.
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Section 253 of Companies
Act, 1956 makes it compulsory that only an individual can be a Director.
Hence, a minor, being an individual, may be appointed as a Director of a public
Company.
If the Articles of
Association of the Company provides for qualification shares, the appointment
of a minor as Director depends upon his acquisition of that much shares in
the Company. Since a minor is incompetent to contract, a Company does not
allot shares to a minor. However, he can obtain shares in the Company as a transferee
of fully paid up shares from a shareholder of the Company. In such a case,
the Company cannot refuse to accept such transfer and the minor shall become
a shareholder of the Company (Miss. Nandita
Jain v. Bennet Coleman & Co) and can be appointed as a Director
of the Company.
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Section 408 of
Companies Act, 1956 empowers Central Government to appoint any number of
persons as directors of the Company who are not required to hold
qualification shares. The Central
Government may appoint a minor as Director.
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If the shares held by a minor are fully paid
up, the minor will be entitled to vote at a General Meeting of the Company. Section
87(1) provides for any member of the Company, a right to vote on every
resolution put before the meeting and his voting right on a poll shall be in proportion
to his shares in the paid up capital of the Company.
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Minor and Companies
Act, 1956
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An application was
made by a father as guardian of his minor daughter revealing her as a minor.
The Company went into liquidation. It was held that, the transaction was void
and the father who has signed the application for the minor could not be
deemed to have contracted for the shares and could not be placed on the list
of contributories.
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Palaniappa v.
official liquidator, Pasupati bank Ltd (1942).
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If the directors,
without knowing the fact of minority, allot shares to a minor in response to
his application, and enter his name in the register of members,
v The Company can repudiate the
allotment and remove his name from the register of members on coming to know
his minority.
v The minor also repudiate during his
minority.
In
either case, the Company must pay back all monies received from the minor in
respect of the shares allotted to him.
If neither party repudiates
the allotment, the minor’s name remains on the register of members and he
does not incur any liability during his minority.
The minor can be a
member to enjoy the benefits of members without being liable as a
contributory.
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Fazalhboy
Jaffer v. The Credit Bank of India (1914)
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After attaining
majority, the minor, if he does not want to be a member, must repudiate his
liability on the shares on ground of minority, and if he does so, the Company
cannot plead estoppel on the ground that he received dividend during his
minority or that he fraudulently misrepresented his age in his application
for shares
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Sadique Ali v.
Jai Kishori (1928)
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After reading this article some Company secretaries mailed their feedback and views. Publishing below two selected mails received from two learned professionals. However, their names are kept unknown. Sharing the knowledge is very essential for professional development and otherwise it is a sin.
mail-1.
I case of private company,
minor can be a Director since consent to act as a Director is not mandatory.
However in public company, minor can not be director since minor can not be
held liable under contract (consent to act as a director) under Indian Contract
Act
mail-2
CA institute in their study material
had cited a case and argued that there is no provisions prohibiting a
minor from becoming a director particularly of a public company.
I also did some home work as a PCS
and found that there is no restriction in Cos Act
However, the 100 $ question is -
1. now DIN is compulsory for
becoming a Director
2. A minor is not allotted a DIN.
Therefore a minor cannot become a Director
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