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Posted on April 26, 2021
Appointing a New Director to your company is made easy with Kanakuppillai
Generally, the Director of a Company is elected by the members of the Board of Directors and the shareholders of the Company. They are the responsible person who can determine and implement the policies of the company. They play a vital role in dealing with the business operations and other affairs of the Company. Director of a company has all the right to direct, manage, oversee or to control all the business operations of the Company. They are appointed to execute the duties and operations of a company as per the provisions of The Company Act, 2013.
According to Section 149(1): “Every Company shall have a Board of Directors consisting of Individuals as director and shall have—
(a) a minimum number of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and
(b) a maximum of fifteen directors: Provided that a company may appoint more than fifteen directors after passing a special resolution.”
The appointment of Directors is the most important process as it plays a vital role in the growth and development and management of the Company. Appointing new Directors are done from time to time depending on the requirements of the shareholders of the company.
To appoint an individual as a director of the company, that particular individual should proposes a director identification number (DIN) and digital signature certificate (DSC). it is easy to obtain a DIN number as any individual who is above the age of 18 can apply for this number. The residency status or the nationality of the applicant does not matter to apply DIN. The time period to file for the appointment of the director takes about 10 – 15 working days.
Before going to the procedure of adding a director to your company, let’s have a look at the types of Directors in a Company.
Managing Director of a company is a Director, who by moral excellence of Articles of Association of a company or a resolution passed in its general meeting, or an agreement with the company or by its Board of Directors, is confided with substantial powers of managing the business affairs of the company.
Executive Director of a company is a Director, who is in regular employment of the company. and are profoundly involved with the growth and the management of the company and managing the business operations of the company.
Ordinary Director of a company is a simple Director who participate in all Board Meetings of a company and discuss the matters that are put before the Board of Directors. These Directors can be full-time Directors or can also be as a Managing Directors of the company.
Additional Director of a company means a person appointed by the Board of Directors once in annual general meetings which is subject to the provisions of the Articles of Association of a company. These additional Directors can take the responsibilities of the office only up to the next annual general meeting of the Company.
Alternate Director is an eligible individual who is appointed by the Board of Directors in a general meeting to perform as a Director in the absence of original director for a certain period of about three or more months. Generally, alternate Director will be a Non-Resident Indian or Foreign Collaborators of a company.
How to Appoint a Director of the Company?
Basically, to start a business, just one or two directors are enough to manage and control the business, but when the business grows, you need someone to help or to join the management team to develop the business to the next level. So, here is the complete procedure about how to appoint or add a new director to your company under the Companies Act, 2013
- First, decide the person whom you are going to appoint as Directors of the Company and prepare the documents required to file to appoint the person as a director of the company.
- Apply for Digital Signature Certificate for the person and most importantly affiliate the DSC as Director on online MCA portal.
- Then, fill form DIR-3 to apply for DIN which also important to appoint the director of the company. And affix DSC on it and file it on online MCA portal, with payable fees.
Here in this process, you have to submit the following documents:
- Passport Size Photograph of the person
- ID Proof of the individual can be:
- Copy of Passport
- National ID where he/she own the nationality and that should be attested by Indian Embassy / Consulate / High Commission /Apostille,
- Person of Indian Origin (PIO) card: – A foreign nation of Indian Origin can produce POI issued by Government of India
- Copy of Overseas Citizen of India (OCI) card issued by GOI)
- Address Proof of the individual to appoint as a director of the company
- Copy of Passport
- Other National ID attested by Indian Embassy / Consulate /High Commission /Apostille
- Bank account statement in the country where they residence and it should be duly attested by Indian Embassy /High Commission / Consulate / Apostille in the country where the applicant is located
- NRE bank account statement
- Person of Indian Origin (PIO) card issued by Government of India or
- Overseas Citizen of India (OCI) card issued by GOI)
Once the DIN is allotted, draft and be ready with all needed documents for the appointment of a proposed individual as a director of the company and submit these documents in form DIR- 12.
Documents required in this step include:
- DIR-2(permission to act as Director of the Company)
- DIR-8 (Intimation by Director about his interest in other entities and Disqualification under section 164 of the Companies Act, 2013)
- The resolution passed by the Company for his/her appointment as a director of the company
- Letter of Appointment form the company
Then, file e-form DIR-12 with ROC along with all the above documents within a time period of 1 month or 30 days from the date of his/her appointment as a director of the company.
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Here is the procedure to add or appoint an additional director to the company
- First check your company’s Articles (AOA) of the Company thoroughly to confirm whether it contains any power/authorization to appoint or add a Director read with Section 161(1) of the Companies Act, 2013.
- Then, check whether the person have DIN No. or Not. If not apply for DIN.
- Following are the documents required from the director to appoint or to add the individual as a director of the company
- Acceptance letter to act as Director in Form DIR-2 consistent to Rule-8 of Companies (Appointment & Qualification of Director) Rules, 2014-
- Statement by Director in form DIR-8 in terms of Companies (Appointment & Qualification of Directors) Rules, 2014, to the effect that the individual is not disqualified u/s 164(2) of the Companies Act, 2014.-
- The revelation of Interest in Form MBP-1 pursuant to Section 184(1) read with Rule 9(1) of the Companies (Meetings of the Board and its Powers) Rules, 2014.
Even if there is nothing to disclose on the part of appointing the additional Director, still there is a requirement to take form MBP-1 from Director. (NIL disclosure is also a disclosure under section 184(1).
After obtaining all the above documents from the director, the following steps has to be done to complete the procedure
- Call the Board Meeting.
- Pass Resolution for appointment of Additional Director of the company.
- Issue Letter of Appointment.
- File e-form DIR-12 [Along with CTC+ Consent + Letter of Appointment)
- File e-form MGT-14[For disclosure of interest in MBP-1]
After completing all the above-mentioned procedure, now this person can act as Additional Director till next AGM of the company. If the company wants to appoint him as director, then govern the individual as a director in General Meeting by Shareholder Resolution. Then file Form DIR-12 for change in designation of Director of the company along with ordinary resolution.