What Is The Process For Appointment Of Director In Private Company

Before we head over to the procedure for appointment of directors, it is mandatory to understand the types of directors, conditions and reasons to add them. A company is legally run and managed by individuals called directors. Its management is handed over to the board of directors. There might be some circumstances wherein a company may need to add a director depending on the company's requisites or business stakeholders. A board of directors is a cumulative body of directors of a company.

Nevertheless, the appointment of the directors should be as per the Companies Act 2013 to have legal validation.

Add director to company

According to the Memorandum of Association (MOA) and Articles of Association (AOA), a director is somebody whom the company shareholders choose to handle the company affairs. The individual who wants to be a director should have a Director Identification Number(DIN) and Digital Signature Certificate(DSC).

Any individual above 21 years can be a director of a company. The AOA of a firm must comprise provisions for adding a director. The companies act 2013 states the process which a company should abide by to add director in company. A private company must have a minimum of two directors. Nevertheless, a company can have fifteen directors.

Kinds of Directors in a Company

There are various kinds of directors in a company. A few of them are as under:

• Women Director
• Additional Director
• Independent Director
• Executive Director
• Non-executive Director
• Nominee Directors
• Alternate Director
• Small Shareholders Directors
• Residential Director
• Managing Director
  
  

Why add a director to the company?

Below are the reasons why a firm should add or change directors:

Acquire new talent on the company

As the firm expands, it will require to bring incredible talent to its board of directors to fulfil the supplementary requisites. Adding or changing the top-level management as the company grows is essential.

Avoid ownership dilution

Directors are mainly accountable for the everyday operations and management of a company. The appointment of a director in a private company will aid the shareholders in consigning operational responsibilities to them without losing any tactical control.

The inadequacy of present directors

A company might want to change its directors by appointment of directors in a private company because of the inadequacy of the existing directors. Sometimes, it might happen that the current directors cannot fulfil the work requisites because of physical illness, family issues, or personal or retirement issues. In such scenarios, the company requires to add a director to company.

Fulfilling the statutory limit

Each company should keep some number of directors according to the Companies Act, 2013. However, for the retirement of current directors or unexpected death, the firm might not fulfil the minimum statutory limit of directors. In this circumstance, the company should instantly appoint directors, i.e. a minimum of two directors for a private limited firm.

Criteria for Appointing Directors

The two things you should know regarding the procedure for appointment of a director are:

· The candidate must be between 25 to 70 years of age.

· The candidate should not have been locked up or fined under any laws.

The other conditions are as under:

• They should not have been in custody or condemned under the Conservation of foreign exchange and Prevention of Smuggling Act, 1974
• If the company endorses the appointment of a director by an exclusive resolution in the general meeting or gets the central government's sanction, then the upper age limit of 70 years will not be valid.
• They should be chosen for a managerial post in other firms and paid for it.
• They should be an Indian resident.
• The word resident also comprises a person staying in India for at least 12 months before the appointment date.
  
  

Procedure for appointment of director

Ensure AOA for director appointment provision

The primary step is to ensure the AOA of the company before the appointment of a director. Then, the AOA must give a clause for adding or appointing a director. If there is no prerequisite in the AOA for adding a director, the AOA must be modified to get a provision enabling additional directors.

Carry out general meeting

Further, in the procedure for appointment of a director, the company should assign a director through a resolution in a general meeting. In addition, there must be a resolution to add a director to an Annual General Meeting (AGM). If the company thinks of adding a director in the mid-year, it can execute a resolution in an Extraordinary General Meeting (EGM). 

In this case, a company should conduct a board meeting to apply a resolution for an Extraordinary General Meeting (EGM). The firm must pass a resolution for appointing a new director. The company must file the declaration for the appointment of the director in Form MGT-14 with the ROC within 30 days of the resolution.

Apply for Director Identification Number

After the company gives the resolution to appoint a director in an EGM or AGM, the potential director must apply for DIN and DSC(if an individual does not have a DIN and DSC). After getting the DIN, the director should give their DIN and an assertion that they are eligible as a director under the Companies Act 2013 to the company.

Assent from the potential director

After getting the DIN, the person expected to be added as a company director should provide their consent to work as the director in Form DIR-2. A person cannot be chosen as a director until they give sanction to the company to handle the office as the director.

Filing of the form with the Registrar of Companies (ROC)

In this procedure for the director's appointment, after the director's resolution and getting the DIR-2 from the director, the company can assign the person as a director. The company should file the DIR-12 and DIR-2 and specifications of the appointment of the director after the appointment of the director. The company should file Form DIR-12 and DIR-2 with the ROC within 30 days of the appointment.

Documents for appointment of director in a private company:

• PAN card of the director
• Passport size photograph
• Proof of residence, like rental agreement, utility bills, etc
• Identification proof, like driving license, Voter ID, Aadhaar card, etc
• Digital Signature Certificate (DSC) 
  
  

How to add a director to your company?

Step 1: The potential director must have a DSC if they do not hold a DSC.

Step 2: The potential director must get a DIN in form DIR-3 if they do not hold a DIN.

Step 3: The company must conduct a general meeting to pass a resolution to add director to company.

Step 4: The potential director should sanction the company for their appointment as a director in Form DIR-2. After the company gets the DIR-2 from the potential director, the person is selected as a director.

Step 5: After the director is appointed, the company must issue the appointment letter to the director.

Step 6: Once the appointment letter is issued, the company should file forms about the appointment within 30 days with the ROC.

The Final Takeaway

We hope you got aware of the appointment of the director. A person to be a director does not need any qualifications unless the Article of Association states any. The directors of a company are accountable for its performance and benevolence in the market. A competent director can help the company expand and take it to the next level. 

If you are facing any difficulty with the director process appointment, contact Lawgical India. Our experts will do the entire work hassle-free. Reach us now.

FAQs

1. Why would a company need to add a new director?
Companies often appoint new directors to bring in fresh expertise, meet legal requirements, or replace current directors. Lawgical India can guide you through this entire process smoothly and legally.

2. Who can be appointed as a director?
Any individual over 21 years of age with a DIN and DSC can be appointed, provided they meet the eligibility criteria. Don’t have a DIN or DSC yet? Let Lawgical India help you get started hassle-free.

3. What documents are needed to appoint a director in a private limited company?
You’ll need PAN, address proof, ID proof, DSC, and a passport-size photo. Lawgical India will collect, verify, and file all the necessary documents for you.

4. What is the process of appointing a director?
The company must check its AOA, pass a board/general meeting resolution, get consent (Form DIR-2), and file DIR-12 with ROC. We at Lawgical India handle the full legal procedure from resolution to ROC filing—end-to-end.

5. What if the director doesn't have a DIN or DSC?
No problem. Lawgical India will help the director apply for a DIN (DIR-3) and DSC, and complete all compliance filings.

6. How soon should the appointment be filed with ROC?
The company must file within 30 days of appointment. Avoid penalties—Lawgical India ensures timely and accurate filings.

7. Is it mandatory to pass a resolution in a general meeting?
Yes, either in an AGM or EGM. Lawgical India can assist in drafting resolutions, conducting meetings, and legal filings.

8. Can I add more than 15 directors to my company?
Yes, but only with special approval via a special resolution. Need help with that? Lawgical India can manage the compliance.

9. What if the AOA doesn’t allow adding directors?
Then the AOA must be amended first. Lawgical India will help you modify your AOA and complete the appointment legally.

10. I need to add a director urgently. What should I do?
Contact Lawgical India today for a free consultation. Our experts will get your appointment done quickly, legally, and hassle-free.