A board resolution is a document that is made official by a company’s board of directors once it approves decisions made at the meeting of a board. One of the most common and important resolutions is the appointment of a director.
This blog explains when and why such a resolution is required, who can be appointed, the compliance procedures involved, and provides a ready-to-use format for the resolution.
Introduction
Directors have an integral role in the governance of a company as they provide guidance, oversight, and direction to its management and strategic decision-making. When a new director is appointed, the board must formally appoint the new director through a resolution. The resolution must be made formally by the company board, and then included in the company’s legal records, and submitted to the Registrar of Companies (RoC) as a legal obligation under the Companies Act, 2013.
Whether the director is appointed to fill a casual vacancy, as an additional director, or as a replacement, passing a resolution ensures transparency, accountability, and legal recognition of the appointment.
When is a Board Resolution Required?
A board resolution for director appointment is required in the following cases –
- Appointment of an additional director under Section 161(1)
- Filling a casual vacancy under Section 161(4)
- Appointment of a first director in case it’s not specified in the Articles
- Appointment of a managing or whole-time director
- Change in the existing board composition
- Appointment of a nominee director by banks or financial institutions
Types of Directors That Can Be Appointed
Under the Companies Act, different types of directors can be appointed, and each requires a board resolution –
- Executive Director / Whole-time Director
- Non-executive Director
- Independent Director
- Additional Director
- Nominee Director
- Alternate Director
- Managing Director
Each type of appointment must be made as per the Articles of Association and subject to applicable sections of the Act.
Legal Compliance for Director Appointment
To complete the process, the company must follow these key steps –
- Obtain DIN (Director Identification Number) if the appointee doesn’t already have one
- Obtain consent in Form DIR-2 from the proposed director
- Conduct a board meeting and pass the resolution
- Submit the Form DIR-12 to the Registrar of Companies within 30 days of their appointment
- Amend the register of directors and key managerial personnel
- Include the appointment in the next AGM if shareholder approval is required
Sample Format – Board Resolution for Appointment of Director
Given below is a standard format for passing a resolution at the board meeting –
[On Company Letterhead]
Certified True Copy of a Resolution made at the Meeting of the Board of Directors of [Company Name] held on [Date] at [Registered Office Address]
RESOLUTION FOR APPOINTMENT OF DIRECTOR
“RESOLVED THAT pursuant to the provisions of Section 152 and other applicable provisions of the Companies Act, 2013, and the rules made thereunder, including any statutory modifications or re-enactments thereof, and in accordance with the Articles of Association of the Company, Mr./Ms. [Full Name of Director], holding DIN [XXXXXXXXXXX], is hereby appointed as a [type of director: Additional/Executive/Non-Executive] Director of the Company with effect from [Date of Appointment].
RESOLVED FURTHER THAT the consent to act as Director received from Mr./Ms. [Name] in Form DIR-2, along with the declaration under Form DIR-8, is hereby noted.
RESOLVED FURTHER THAT Mr./Ms. [Company Secretary/Authorized Person], of the Company, be and is hereby fully authorized to file the requisite forms with the Registrar of Companies and do all acts, deeds and things it may require him/her to do to give effect to this resolution.”
Certified True Copy
For [Company Name]
(Signature)
Name: [Director/Authorized Signatory]
Designation: [Managing Director / Company Secretary]
Date:
Place:
Conclusion
A board resolution for the appointment of a new director is an important thing, but it is more than just a practice; it is also the legal process for making the decision enforceable by corporate law. It doesn’t matter if you are a startup onboarding your first board member or an established company hiring a strategic director, you need to ensure that a board resolution is correctly drafted, passed and filed. This is important for compliance requirements with your company.
Companies also need to consider their statutory records recording and notify the RoC of the appointment. The appointment also needs to be disclosed in the board’s report. A regimented process will provide clarity on a legal basis and build trust with regulators, shareholders and other stakeholders.
References
The Companies Act, 2013 (Act No. 18 of 2013)
The Companies (Management and Administration) Rules, 2014
