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    Appointment of Director

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    Appointment of Director

    Now company compliances is easy, hassle free and quick,
    With EAdvisors experts

    Drop Query

    Provide your exact requirement like number of director, location and business activity through our contact form

    Discussion with Expert

    EAdvisors expert will contact you to discuss about registration process, documents required and resolve your queries.

    Drafting of Application

    Drafting of registration application, MOA, AOA, director consent and declaration as per requirements of Companies Act 2013.

    Issuance of Certificate

    Concerned ROC will issue certificate of incorporation of company, Income tax department allot PAN and TAN etc.

    Appointment of Director
    Appointment of Director

    Definition of Director

    Section 2(34) of the Companies Act 2013 prescribes that “director” means a director who is appointed to the Board of a company. The Director is the one authorized to perform all the functions and duties of a company in accordance with the provisions of the Companies Act 2013.

    As per Section 160 of the Companies Act, a person who is not a retiring director shall be eligible for appointment to the office of a director If he, or some member intending to propose him as a director, has, not less than fourteen days before the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as the case may be, the intention of such member to propose him as a candidate for that office, along with the deposit of one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the case may be, to the member, if the person proposed gets elected as a director or gets more than 25% of total valid votes cast either on show of hands or on poll on such resolution.

    No. of Directorship

    A limit of a maximum of 20 is set for directorship including any alternate directorship. However, for private or public companies which are either holding or subsidiary company of a public company shall be limited to 10.

    Where any person holding office as a director in more than 20 or 10 companies then, shall before the commencement of this Act shall, within a period of one year from such commencement have to choose companies where he or she would like to continue or resign. He or she would then inform his/her preference for the company as well as of the Registrar.

    The one appointed shall not be eligible to work as a director in more than the specified number of companies after serving the notice of resignation or after the expiry of one year from the commencement of the act, whichever is less.

    Where the person is found to contravene the provision of directorship as stated in Section 163 of the Companies Act 2013, a penalty shall be implied. So, he or she shall be punishable with fine which shall not be less than Rs. 5,000 but which may extend to Rs. 25,000 for every day after the first day during which the contravention continues.

    Max and Min Directors

    As per the provision stated in Section 149(1) of the Act, every company is required to have a minimum number of 3 directors in case of a Public Company, 2 directors in case of a Private Company, and 1 director in case of One Person Company. Talking about the maximum number of directors, a company can appoint a maximum of 15 directors. However, appointing more than 15 directors is also possible but only after the Special Resolution is passed in the general meeting. Under this, approval of the Central Government is not necessary. Moreover, in order to comply with the max and min directors, a period of one year is provided which shall not be exceeded.

    Appointment of Other Directors

    1. Appointment of Additional Director

    As per Section 161 (1) of the Companies Act, where the articles of association (AOA) gives power to the Board of Directors(BOD) then, in that case B.O.D shall take the charge to appoint additional director of a company.  Till the next annual general meeting or the last date on which annual general meeting should have been held, such additional director appointed shall hold the office.

    Note:- A person who is disqualified to become a director is automatically disqualified to become additional director of the company.

    1. Appointment of Alternate Director

    As per Section 161 (2) of the Companies Act, prescribes some clauses, namely-

    • The Board of Directors of a company must be authorized by its articles or by a resolution passed by the company in a general meeting for the appointment of alternate director.
    • The person in whose place the Alternate Director is being appointed should be absent for a period of not less than 3 months from India.
    • The person to be appointed as the Alternate Director shall be the person other than the person holding any alternate directorship for any other Director in the Company.
    • If it is proposed to appoint an Alternate Director to an Independent Director, it must be ensured that the proposed appointee also satisfies the criteria for Independent Directors.
    • An alternate director shall not hold office for a period longer than that permissible to the director in whose place he has been appointed and shall vacate the office if and when the director in whose place he has been appointed returns to India.
    • If the term of office of the original director is determined before he so returns to India, any provision for the automatic reappointment of retiring directors in default of another appointment shall apply to the original, and not to the alternate director.
    1. Appointment of Director by Nomination

    As per Section 161 (3) of the Companies Act,  as per the new provision the Board of Directors (BOD) may appoint a person who shall be designated as a director nominated by any institution in pursuance of the provisions of any law for the time being in force or of any agreement or by the Central Government or the State Government by virtue of its shareholding in a Government Company.

    1. Appointment of Director in case of Casual Vacancy

    As per Section 162 (1) of the Companies Act. If any vacancy arises due to death or resignation of any director then in that case before the expiry of his term, the Board of Directors (BOD) can appoint a director who shall hold the office up to the term of the director in whose place he is appointed.

    1. Appointment to be made by voting individually

    Primarily, a proposal relating to appointment of two or more persons as director of the company shall be passed in the meeting without any vote passed against it. After that, resolution for appointment of director shall be moved.

    1. Proportional representation for appointment of director

    The articles of a company may provide for the appointment of not less than two-thirds of the total number of the directors of a company in accordance with the principle of proportional representation, whether by the single transferable vote or by a system of cumulative voting or otherwise and such appointments may be made once in every three years and casual vacancies of such directors shall be filled as provided in sub-section (4) of section 161.

    Documents required for Director's Appointment

    Here are some of the essential documents required for appointing a director in a company. The necessary documents are as follows:-

    • Passport (mandatory in case of foreign applicant)
    • PAN Card to be presented for identity proof
    • Proof of residence (electricity bill, rental agreement, Aadhaar Card, Voter ID, passport, driving license)
    • Passport size photograph
    • Digital Signature Certificate (DSC)
    • Director Identification Number (DIN)

    Provisions relating to Appointment

    Some of the necessary provisions relating to the appointment of a director are as follows:-

    1. Barring the provision stated in the Act, the appointment of every director of a company shall be done in the general meeting.
    2. Obtaining Director Identification Number (DIN) is a must-have thing, without which no director can be appointed in the company.
    3. The person who is selected to be appointed a director in the company shall mention Director Identification Number (DIN) along with a declaration stating that he is not covered in any of the disqualifications and therefore he is not disqualified to become a director of a company.
    4. It is necessary for the director appointed to present his or her consent in form DIR-2 on or before the appointment. Form DIR-2 is a form representing the consent to hold the office of director. Also, the company is also expected to fill Form DIR-12 which contains the particulars of appointment of directors and KMP along with form DIR-2 as an attachment within 30 days of the appointment of a director with necessary fee.
    5. Generally, provisions relating to the appointment of a director is mentioned in the Articles of Association (AOA) of a company. However, where it is not specified not less than two-thirds of the total number of directors of a public company shall be liable in case of retirement of rotation and also eligible for reappointment at annual general meeting.
    6. Every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.

    Other Provisions

    “Appointment and Qualification of Director”

    Women Director

    At least one women director is necessary to be appointed in every listed company within one year from the commencement of the second proviso to Section 149 (1) of the Act. Moreover, every other public company has paid up share capital of Rs. 100 crores or more or turnover of Rs. 300 crore or more as on the last date of latest audited financial statement shall also appoint at least one women director within 1 year and new companies has to also comply with the appointment of director provision within 6 months from the date of its incorporation. And where any intermittent vacancy arises, it shall be filed by board of directors within 3 months.

    Independent Director

    At least one third of the total number of directors as an  independent directors shall be appointed by every listed company.
    In addition, at least 2 directors as independent directors shall be appointed where a company has paid up share capital of Rs. 10 crore or more or turnover of Rs. 100 crore or more or in aggregate, outstanding loans/ borrowings/ debentures/ deposits, exceeding Rs. 50 crore or more.

    In case of intermittent vacancy of an independent director then it must be filed by the board of directors within 3 months.

    Vacation of Office of Director

    The director appointed by the company shall have to vacate the office in the following circumstances:-
    If a director

    1. Incurs any of the disqualifications specified in section 164;
    2. absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board;
    3. He acts in contravention of the provisions of section 184 relating to entering into contracts or arrangements in which he is directly or indirectly interested;
    4. He fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested;
    5. He becomes disqualified by an order of a court or the Tribunal;
    6. He is convicted by a court of any offence, whether involving moral turpitude or otherwise and sentenced in respect thereof to imprisonment for not less than 6 months;
      Provided that the office shall be vacated by the director even if he has filed an appeal against the order of such court;
    7. He is removed in pursuance of the provisions of this Act;
    8. He, having been appointed a director by virtue of his holding any office or other employment in the holding, subsidiary or associate company, ceases to hold such office or other employment in that company.

    Resignation of Director

    As per Section 168 & Rule 15 and 16 of the Companies Act, a director of a company can give his or her resignation by giving a notice in writing. The Board after receiving the notice, shall within 30 days intimate the Registrar in Form DIR-12 and also place the fact of such resignation in the Directors’ Report of subsequent general meeting of the company and post the information on its website. A copy of the same shall also be forwarded to Registrar in Form DIR-11 along with the detailed reason for the resignation and that too within 30 days from the date of resignation. The notice shall become effective from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later. Provided that the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.
    If all the directors of a company resign from their office or vacate their office, the promoter or in his absence the Central Government shall appoint the required number of directors to hold office till the directors are appointed by the company in General Meeting.

    Removal of Director

    As per Section 169 of the Companies Act, a company can remove any of the director in the company except for the one appointed by NCLT (National Company Law Tribunal) before the expiry of the period of his office after giving him a reasonable opportunity of being heard after passing the ordinary resolution.

    The following provision as stated in Section 169 of the Act shall not apply to Section Section 163 which is relating to appointing not less than two thirds of the total number of directors according to the principal of proportional representation. Here, for removal of any director, a special resolution is a must.

    After receiving the resolution, company shall forthwith send a copy thereof to the director concerned, and the director, whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting.

    How we work

    Day 1

    The first day is when a client sends documents. The day, when we receive the client’s documents that are required for the appointment of a director.

    Day 2

    Generally, on the second day we begin with drafting of the documents and further send it to the client for signing purpose.

    Day 3

    Day 3 is when we receive the signed documents from the client. After documents are received, a quick check is done to make sure everything is in proper manner. After it’s checked, filing of form with ROC is done.

    Frequent Asked Questions

    Appointment of Director

    Any living person or an individual who is not covered under the disqualifications for appointment of director shall be eligible to be appointed as a director in a company.

    If any person or an individual is covered under the below-mentioned disqualifications, then he or she shall not be eligible to be appointed as director. The disqualifications are as follows:-

    Where the person is:-

    1. is of unsound mind and stands so declared by a competent court;
    2. he is an undischarged insolvent;
    3. he has applied to be adjudicated as an insolvent and his application is pending;
    4. 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;

    1. an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;
    2. 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;
    3. 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
    4. he has not got the DIN.

    An additional disqualification is provided in sub section (2) of Section 164 relating to consequences of non filing of financial statements or annual returns. Any person who is or has been director 20 Appointment and Qualifications of Directors of any company which has not filed any financial statements and Annual Return for 3 continuous financial year or has defaulted in payment of debentures/deposit/dividend etc, shall also not be eligible for appointment as director of any public company and for reappointment in the same company for a period of five years from the date on which the said company fails to do so.

    Rule 14 prescribed that every director who disqualified u/s 164 (2), shall inform to the company concerned in Form DIR-8 (Intimation by Director) before he is appointed or re-appointed. Whenever a company fails to file the financial statements/annual returns/fails to repay any deposit, interest, dividend/fails to redeem its debentures as specified u/s 164 (2), the company shall immediately file Form DIR-9 (Report by the company to Registrar), to the Registrar furnishing therein the names and addresses of all the directors of the company during the relevant financial years. But when a company fails to file the Form DIR-9 within a period of 30 days of the failure it would attract the disqualification u/s 164(2), officers of the company as specified u/s 2(60) shall be the officers in default. Upon receipt of the Form DIR-9 the Registrar shall immediately register the document and place it in the document file for public inspection. Any application for removal of disqualification of directors shall be made in Form DIR-10.

    (3) A private company may by its articles provide for any disqualifications for appointment as a director in addition to aforesaid mentioned

    Provided that the disqualifications referred to in clauses (d), (e) and (g) of sub-section (1) shall not take effect—

    (i) for thirty days from the date of conviction or order of disqualification;
    (ii) where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting in sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed off; or
    (iii) where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed off.

    Where any company contravenes any of the provisions of the Appointment of Qualification of Directors then, the company and also the officer of the company in default shall be punishable with fine being not less than Rs.50, 000 but which may extend to Rs. 5,00,000.

    Yes, every company is required to keep at the registered place of business all the registers of directors and key managerial personnel containing following mentioned particulars, namely:-

    1. Director Identification Number (Optional for KMP);
    2. present name and surname in full;
    3. any former name or surname in full;
    4. father’s name, mother’s name and spouse’s name(if married) and surnames in full;
    5. date of birth;
    6. residential address (present as well as permanent);
    7. nationality (including the nationality of origin, if different);
    8. occupation;
    9. date of the board resolution in which the appointment was made;
    10. date of appointment and reappointment in the company;
    11. date of cessation of office and reasons therefor;
    12. office of director or key managerial personnel held or relinquished in any other body corporate;
    13. membership number of the Institute of Company Secretaries of India in case of Company Secretary;
    14. PAN mandatory for KMP who is not having DIN

    In addition to the details of the directors or key managerial personnel, the company shall also include in the aforesaid Register the details of securities held by them in the company, its holding company, subsidiaries, subsidiaries of the company’s holding company and associate companies relating to:

    (a) the number, description and nominal value of securities;
    (b) the date of acquisition and the price or other consideration paid;
    (c) date of disposal and price and other consideration received;
    (d) cumulative balance and number of securities held after each transaction;
    (e) mode of acquisition of securities ;
    (f) mode of holding – physical or in dematerialized form; and
    (g) whether securities have been pledged or any encumbrance has been created on the securities.

    Form DIR-12 is the prescribed form necessary to be filed in which a return containing the particulars of appointment of director or key managerial personnel and changes therein, shall be filed with the Registrar within 30 days of such appointment or change, as the case may be.

    Yes, all the members of the company has the right to inspect the register of a director or key managerial personnel. The register shall be kept open for inspection during business hours. Where the member of the company requires copies of the register, the members may be provided by the company within the period of thirty days at free of cost. Also, the register of director or key managerial personnel shall be open for inspection at every AGM (Annual General Meeting) so that any person attending the AGM can have the full access to the registers.

    As per Section 149 (3) of the Companies Act, every company shall have at least one women director who has stayed in India for a total period of not less than 182 days in the previous calendar year.

    Where a director functions as a director even after knowing that he is disqualified then, he shall be punishable with imprisonment for a term which may extend to 1 year or with fine which shall not be less than Rs. 1,00,000 but which may extend to Rs. 5,00,000 or with both.

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