Appointment Process
Application for Digital Signature
Application for DIN
Filing of DIR-12 Form
Appointment of New Director
A director is someone elected by the company shareholders to manage the company affairs as per the Memorandum of Association (MOA) and Articles of Association (AOA). The AOA of a company should contain provisions for adding a director. The Companies Act, 2013 prescribes the procedure that a company must follow to add a new director. A private company should have a minimum of two directors at all times. However, the company can have a maximum of only fifteen directors. The authority to approve the resignation of the director lies with the members of BoD whereas the appointment must be made through consent of shareholders. Whether it is an appointment, removal or resignation, the change does not take effect until the intimation is made to Ministry of corporate affairs.
How To Add A Director To Your Company?
Step 1: The proposed director should obtain a DSC & DIN if they do not have a DSC.
Step 2: The company should conduct a general meeting to pass a resolution for appointing the new director.
Step 3: After the director is appointed, the company should issue the appointment letter to the director.
Step 4: After the letter of appointment is issued, the company must file form DIR-12 with the ROC about the appointment within 30 days.
Step 5: The company must make necessary entries in the Register of Directors and Key Managerial Personals maintained by the company.
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Documents Required
- The PAN card of the director
- Passport-size photograph of the director
- Digital Signature Certificate (DSC) of the director
- Identification proof of the director
- Form DIR-2 (Consent to act as a director)
- Form DIR-12 (Particulars of appointment of a director)
Why changing Directors is required ?
Hire new talent on board: With the growth of business, strategies and alliances are developed, that requires inputs of each department are required for effective planning. Also, with an addition of the new product line or department, an expert to lead the team can be hired in a managerial position being director of the company. This benefits the company with specialization and focused efforts
Assign operational responsibility without dilution ownership: Directors are responsible for day-to-day operations. With the appointment of an additional director, the shareholders can assign the operational responsibilities to directors keeping strategic control in hand. Here, a director does not require subscribing to share capital, hence, the ownership and voting rights of shareholders does not dilute with a new person on Board.
Inability to work by existing directors: The existing directors may be unable to serve the company after a certain period due to retirement or other personal reasons. Whether it is a resignation by the director or his death, the company needs to make sure that its work is unaffected. It needs to process for both discontinuations by director and appointment of a new director if any.
Number of directors fall under statutory limit: The Companies Act has prescribed the minimum number of directors in any company, which is 2 and 3 for Private and Public company respectively. At any time during the company’s existence, the number of directors shall not reduce below from the limit. The company must appoint a new director(s) within 6 months if the number reduces below 2/3.
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Frequently Asked Questions
No, you are not required to obtain another DIN. It is permanently allotted and can be used for a person’s subsequent appointment in any company/LLP.
The minimum number of directors required is based on the type of company. For a one-person company it is 1, for a private company it is 2 and a public company needs to have at least 3 directors.
There is no requirement to subscribe the shares by the director. However, if the Articles (AoA) of the company prescribe for any such subscription, it must be fulfilled as a condition for his appointment.
Yes, an NRI or foreign national may be added as a director in a private limited 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.It is similar to a PAN Card number.DIN is to be mentioned in documents while appointing a person as a director of a company.
Only an individual can act as a director in the company. Hence, if any LLP or Company is willing to be added as a director in the company, only its representative may act as the director.
