Appointment of Director in Company
Appointment of Director in Company
A company’s Articles of Association (AOA) empowers the Board of Directors under sections 161 and 169 of the Companies Act 2013 the right to add, remove, or change the company’s directors. To execute this practice, a clause relating to the appointment of Directors must be included in the AOA of the Company. The person appointed as a director should be eligible for all the relevant provisions and must give his written consent, and the company must register it with itself.
By these four steps, the appointment of new director can be acquired in private company:
- Digital Signature Certificate (DSC) of New Directors.
- Allocation of DIN (Director Identification Number) of New Directors.
- Filling and preparing all Forms and Documents.
- Filling out e-forms online with MCA.
Procedure for appointment of director in private company
1. Obtain the Consent of the Director in Form DIR 2
The first step for the appointment of Director in private company is to obtain the consent of the proposed Director to act as a Director in the company, which can be obtained by filling out the Form DIR 2 with all the necessary Documents.
2. Obtain the DSC and DIN of the proposed Director
The next step is to obtain the Digital Signature Certificate (DSC) and Director Identification Number (DIN) of the proposed company director. As far as the DSC is concerned for the director in private company, you can acquire the DSC from the certified authorities of India. Whereas the DIN is a mandatory requirement for a person to be appointed as a director in the company. The proposed director shall make an application electronically in Form DIR 3 to the Central Government for the allotment of a DIN along with the required fees.
3. Conducting General Meeting and Board Meeting
The directors are required to be appointed in the general meeting of the company. The company shall issue notice to all the shareholders notifying them to hold an Annual General Meeting (AGM) only for explanation. Since EGM is called for specific matters and the appointment of a director is not an extraordinary matter. Hence it can be done in AGM. Once the notice for conducting General Meeting is issued to all the Shareholders, the next step is to conduct the meeting on the chosen date and time to pass all the necessary resolutions for the Appointment of Directors in the Company.
4. Issue letter of Appointment
After passing the resolution, the next step is to issue a letter of appointment to the company’s Director. The Appointment letter must include the terms and conditions of the appointment of Directors, including the remuneration to be payable to them.
5. File Form DIR-12 to ROC
After the completion of all the necessary steps, the company should file the Form DIR-12 to the Registrar of Companies within 30 days from the Director’s appointment date, along with all the essential documents.
After the procedure for appointment of director is completed, the company shall make critical changes and entries in the Register of the Director and vital managerial personnel. Also, the changes are required to be included in registers of contracts and arrangements in which Directors are interested in Form MBP-4.
Company Registration Procedure
- Identification proof (PAN card)
- Residency proof (electricity bill, rental agreement, Aadhar Card, voter ID, passport, driving licence)
- Passport-size photograph.
- Digital Signature Certificate (DSC) of the proposed director.
- PAN card: mandatory for an Indian applicant.
- Passport: compulsory for a Foreign applicant.
Managing director owning the most superior powers, is usually the company owner and the one authorised to manage all the company affairs.
This director is under all-time duty employment for the company and is generally involved with managing all the company affairs.
The Board appoints an additional Director between two AGMs. The tenure of these directors is only up to the Company’s next Annual General Meeting (AGM) date.
In a general meeting, the Board appoints an Alternate Director to act in place of the original director. In case the original director is absent for up to three months.
The ordinary director is responsible for attending all the board meetings and participating in matters before the Board of Directors. These directors are part-time directors.
Increased Borrowing Capacity
Companies benefit from increased borrowing capacity of funds as they can issue secured and unsecured debentures.
Process of appointment of new director in private company
Step 1: The Articles of Association (AOA) shall include a provision to add director in the company. If no such provision is included in AOA, then it is required to be amended.
Step 2: The proposed director must approve via the Form DIR-2 to function as the director.
Step 3: The company passes a board resolution for the appointment of new director in private company as well as the appointment of director in private company.
Step 4: Get a DSC (digital signature certificate) and DIN (director identification number) for the appointment of new director in private company.
Step 5: Collect the primary documents and data which requires for the procedure and obtain Form DIR-2, Form DIR-12 and Form DIR-8 from the ROC.
Why Add Director to Company
The following are the common reasons why you should choose to add director in company:
- To get new talent on Board.
- No dilution of ownership.
- The inefficiency of existing directors.
- To meet the statutory limit.
Few doubts important to be resolved quickly
1. Is my physical presence required during the appointment of directors?
No, every process involved with the appointment of director in private company accomplishes online. Your work is only to send scanned documents and forms, and all e-forms will be filed electronically on MCA Portal.
2. What is Digital Signature Certificate?
A Digital Signature Certificate (DSC) is a tool that allows you to sign all documents electronically. As every procedure for appointment of director in private company completes online, hence DSC is one such crucial step in the process.
3. What is Director Identification Number (DIN)?
DIN stands for Director Identification Number. It is an 8-digit unique number that the Central Government provides to the one aiming to get appointed as the company’s director.
4. Are there any eligibility criteria to add director to company?
Yes, there is an eligibility criterion to add director in company, and it is as follows:
- The proposed individual must be a major.
- They must qualify as per the laws mentioned under the Companies Act 2013.
- The board members must approve the appointment of the proposed individual.
5. Can a company add a foreigner or NRI as a director?
Yes, an NRI or foreign national may be added as a director in a private company as long as there is at least one director on the board who is an Indian resident. To do so, they must have a valid passport and a DIN.
6. What is the maximum number to add director to company?
A private company can have a maximum of 15 directors.
Add-Directors In Company
- Single director appointed
- Appointment in 2 days
- 1 Digital Signature
- 1 DIN
- 2 Director Appointment
- Appointment in 2 days
- 2 Digital Signatures
- 2 DIN
- Each above 2 Directors"
- Appointment in 3days
- Digital Signatures