APPOINTMENT OF DIRECTOR

APPOINTMENT OF DIRECTOR

The supreme executive authority controlling the management and affairs of a company vests in the team of directors of the company, collectively known as its Board of Directors. At the core of the corporate governance practice is the Board of Directors which oversees how the management serves and protects the long term interests of all the stakeholders of the Company.

DIRECTORS

Section 2(34) of the Companies Act, 2013 prescribed that “director” means a director appointed to the Board of a company.
Section 2 (10) of the Companies Act, 2013 defined that “Board of Directors” or “Board”, in relation to a company, means the collective body of the directors of the company.

 

NEED FOR DIRECTORS

A Company cannot Act by itself

A Company has no mind or body of its own, therefore, Directors are appointed to act on behalf of the Company.

Separation of Ownership from Management

A large-sized Company may have numerous shareholders who are scattered throughout the country, making it impossible for them to take decision relating to day to day affairs of the Company, Directors are appointed.

Statutory Requirement

It is mandatory for every company to have minimum number of directors as per Section 149(1) of the Companies Act, 2013 i.e.

  1. One Director in case of One Person Company
  2. Two Directors in case of Private Company
  3. Three Directors in case of Public Company


*Note: As Per Section 149(1)(b), A Company can appoint maximum 15 directors [Provided that a company may appoint more than fifteen directors after passing a special resolution]

 

APPOINTMENT OF DIRECTORS

  • Appointment of First Directors
  • The first directors of most of the companies are named in their articles. If they are not so named in the articles of a company, then subscribers to the memorandum who are individuals shall be deemed to be the first directors of the company until the directors are duly appointed

 

  • Appointment of Directors by Shareholders
  • Appointment in case of Retirement of directors and filling of Vacancies
  • Appointment of a person other than retiring director
  • Appointment of directors by Proportional Representation
  • Appointment of directors by small shareholders

 

  • Appointment of Directors by Board of directors
  • Appointment of an Additional director
  • Appointment of director by filing a Causal Vacancy
  • Appointment of an Alternate Director

 

  • Appointment of Directors by Third Parties
  • The directors appointed by third parties are called as Nominee directors

Procedure for Appointment of Additional Director

  • Ensure that the Article of Association of the Company authorise the Board of Directors to appoint an additional director;
  • Ensure that individual proposed to be appointed as an additional director, does not suffer from any of the following disqualification :-
  • he is of unsound mind and stands so declared by a competent court;
  • he is an undischarged insolvent;
  • he has applied to be adjudicated as an insolvent and his application is pending;
  • he has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence. If a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director in any company;
  • an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;
  • he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;
  • he has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or
  • he has not got the DIN.
  • The Board of Directors shall appoint an additional director by passing a resolution at a meeting
  • Ensure that Proposed Person must have DIN. If Not, then firstly Apply for DIN in E-form DIR-3.
  • A Consent to act as Director in DIR-2 as well as the declaration in Form DIR-8 is required from the person proposed to be director before his appointment;
  • Hold Board Meeting and Pass resolution for Appointment of an additional Director
  • The Company has to file Particulars of Appointment of Director in Form DIR-12 with the Registrar of Companies within 30 days of the Appointment
  •  

Requirements for the Appointment of Director

  • DSC
  • Photograph of Applicant
  • Self-Attested Copy of PAN Card
  • Self-Attested Copy of Aadhar Card
  • Active E-Mail I’d and Phone Number

(OTPs will be sent on E-mail I’d and Phone Number)

  • DIN Application – Form DIR-3 ( If not Having DIN)
  • Photograph of Applicant
  • Self-Attested Copy of PAN Card
  • Self-Attested Copy of Aadhar Card
  • Active E-Mail I’d and Phone Number
  • Qualification and Occupation Details
  • DSC of the Applicant and Director of the Company
  • Board Resolution for the Application of DIN of a person who is proposed to be appointed in the Company
  • Intimation to ROC – Form DIR-12
  • Board Resolution for the Appointment of Director
  • DIR-2 Consent to act as Director
  • DIR-8 Declaration by Director
  • Appointment Letter
  • DIN Approval Letter ( If DIN Applied during Appointment)
  • DSC of the Applicant and Director of the Company

CHECKLIST FOR APPOINTMENT OF DIRECTOR 

S.NO.NAME OF THE ACTIVITYPARTICULARSREMARKSDrafted/PROVIDED
1DSC ApplicationPhotograph of Applicant Provided by Client
  Self-Attested Copy of PAN Card Signed by ApplicantProvided by Client
  Self-Attested Copy of Aadhar CardSigned by ApplicantProvided by Client
  Active E-Mail I’d and Phone Number (OTPs will be send on E-mail I’d and Phone Number) Provided by Client
2DIN Application in Form DIR-3Photograph of Applicant Provided by Client
  Self-Attested Copy of PAN Card Signed by ApplicantProvided by Client
  Self-Attested Copy of Aadhar CardSigned by ApplicantProvided by Client
  Active E-Mail I’d and Phone Number (OTPs will be send on E-mail I’d and Phone Number) Provided by Client
  Qualification Details Provided by Client
  Occupation of Applicant  Provided by Client
  Board Resolution for the Application of DIN of a person who is proposed to be appointed in the CompanySigned by Director of the CompanyDrafted by Professional
  DSC of the Applicant   
  DSC of the Director of the Company  
3Intimation to ROC in Form DIR-12Board Resolution for the Appointment of DirectorSigned by Director of the CompanyDrafted by Professional
  DIR-2 Consent to act as DirectorSigned by ApplicantDrafted by Professional
  DIR-8 Declaration by DirectorSigned by ApplicantDrafted by Professional
  Appointment LetterSigned by Director of the CompanyDrafted by Professional
  DIN Approval Letter ( If DIN Applied during Appointment)  
  DSC of the Applicant   
  DSC of the Director of the Company  

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