Appointment of Director - Legal Process and requirements

Primary requirements before appointing a person as Director

  • Must have valid DIN - IF not available, Apply DIN First
  • A Foreign National is eligible for Directorship
  • AoA Authorised to appoint additional director -  IF not, alter AoA first
  • Take Consent to act as director (form DIR-2) | Issue Appointment letter 

Call A Board Meeting - Pass resolution - File DIR 12 with ROC

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Appointment of Director -  Legal Process and requirements

Appointment of New Director in a Company - Companies Act 2013

Every Company shall have a Board of Directors Consisting of Individuals as director. Accordingly, only an individual can be appointed as director of company. Every director other than first directors of company shall be appointed in general meeting as per Section 152(2).

If company wants to appoint a person as director in meeting other than General meeting Company can do this by appointing such person as additional director. The additional director has to be appointed till date of next AGM or last date on which AGM should have been held, whichever is earlier.

When and Why need of Appointing a New Director?

  • In case of Fill-up of Casual vacancy
  • When number fall below the minimum Quorum required.
  • When requirement for a technically fit Person to Manage, etc.

Only company's shareholders can appoint directors. The Board of Directors can normally also appoint directors but check whether the Articles authorised to do so and whether the shareholders must then confirm the appointment at a general meeting.

Other side legally speaking, Sec. 174(2) provides that the continuing director may act for the purpose of increasing the number of directors to that fixed for the quorum, or of summoning general meeting of the company and for no other purpose. Hence remaining one director can also appoint new director.

ADDITIONAL DIRECTOR

Ensure that the director to be appointed by board of directors exercising the power so conferred in them by the Articles of the company is not such a person who has failed to get appointed as a director in a general meeting. (If A proposal is made in General Meeting for appointment of a person as Director, if resolution got failed not passed in that meeting and that person fails to get appointed as a director in a general meeting, then that person can’t appoint as additional director). The additional director has to be appointed till date of next AGM or last date on which AGM should have been held, whichever is earlier.

Pre-requisites of Directors Appointment

  • Power to Appoint by AoA First Check whether Articles of Association (AOA) of the Company contain power/authorization to appoint Additional Director read with Section 161(1) of the Companies Act, 2013. {If there is no provisions in Articles of the Company then Alter the Articles of the company to have enabling clause for appointment of Additional Director.
  • Mandatory DIN Second Check whether the person have DIN (Director Identification Number) or Not. If the person doesn’t have DIN then, before proceed next step apply for DIN and then have to take DSC (Digital Signature Certificate) as well.
  • Appointment Related Documentations Following documents are required from director to appointment him as additional director-
    a) Consent in writing to act as Director in Form DIR-2 pursuant to Rule-8 of Companies (Appointment & Qualification of Director) Rules, 2014-
    b) Intimation by Director in form DIR-8 in terms of Companies (Appointment & Qualification of Directors) Rules, 2014, to the effect that he/ she is not disqualified u/s 164(2) of Companies Act, 2014.-
    c) Disclosure of Interest in Form MBP-1 pursuant to Section 184(1) read with Rule 9(1) of Companies (Meetings of Board and its Powers) Rules, 2014.

Proceeding for Appointment of Director

Board Meeting
Call the Board Meeting by giving 7 days notice to directors.
Pass Resolution for appointment of Additional Director.
Issue of Appointment Letter
Issue Letter of Appointment of new director
File DIR-12
File e-form DIR-12 attaching CTC of board resolution, DIR-2 and Letter of Appointment.
Appointed as Additional Director.
Regularisation
Now this person will be Additional Director Till AGM of company. If company want to appoint him as director then regularize the person as director in General Meeting by Share holder Resolution. File form DIR-12 for Change in Designation of Director along with ordinary resolution.

Applicable Govt Fee (ROC Fee) in Appointment of Director

Applicable fee for filing of Form DIR-12

Filing of Form DIR-12 should be done within a period of 30 days ( from the date of appointment), else late filing penalty of ROC would be applicable. Penalty would be applicable as given below –

Delay or Non-Compliance Penalty

If company fails to file Form DIR-12 within time then company becomes liable to pay additional fee as below given details –

Our Professional Fee

Appointment of One Director

ROC Compliances, documentations and Filing

Rs. 4000

Appointment of Two Director

ROC Compliances, documentations and Filing

Rs. 7000

Appointment of Three Director

ROC Compliances, documentations and Filing

Rs. 10000

Govt fee to be payable extra and not included in professional fee

Companies Appointment and Qualification of Directors Rules, 2014

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