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The appointment of director is made as per the Articles of Association or under the Companies Act, 2013. In case of a public limited company, at least three directors must be appointed.
In the case of a private company, at least two directors must be appointed. In the case of a one-person company, only directors are to be appointed.
A company may appoint a maximum of fifteen directors, a company may exceed the number of maximum directors after passing a special resolution at a general meeting of the company.
A director is an individual who is appointed to perform the duties and functions of a company according to the Companies Act, 2013.
The minimum number of directors required in the company are:
Director appointment is given under section 152 of the Companies Act, 2013 with the Companies (Appointment and Qualification of directors) Rules, 2014.
The Companies Act, 2013 has not prescribed any specific qualifications for directors of any company. The articles can provide the qualifications. The procedure for the appointment of director in company law is given in the following steps:
Step 1 : Obtain a Digital Signature Certificate
Step 2 : Application for Director Identification Number (DIN) is made by the proposed director of a private limited company before the ROC with the prescribed fees. It can be obtained by filing DIR-3 with the Ministry of corporate affairs (MCA). There is no restriction relating to nationality, Indian nationals, Non-resident Indians and even foreign nationals can obtain DIN from MCA.
Step 3 : Checking Articles of association (AOA) for provision of director appointment of a private limited company. The AOA must provide a clause for appointing or adding a director. The appointment of directors pdf can be downloaded from google. When there is no provision in the AOA for adding a director, the AOA can be modified to contain a provision that allows adding an additional director.
Step 4 : A letter in writing is taken for consent as director in writing in Form DIR-2 for willingness to become a director.
Step 5 : A letter in writing to the effect that the person
is not disqualified to be appointed as director as given in Form DIR-8 under the Companies
Disclosure of Interest in other companies with a shareholding pattern, if any or otherwise a NIL disclosure is filled.
Step 6 : Notice of appointment of director to call Board meeting - The company must appoint a director by passing a resolution in a board meeting/general meeting unless the act provides otherwise. In the case of a private limited company, when the documents are silent for the director’s appointment other than a general meeting, directors must be appointed at the general meeting by shareholders.
Step 7 : Appointment letter to be issued by the company to a director for its appointment.
Step 8 : File E-Form DIR-12 with the Registrar of Companies along with documents such as consent/ approval letter with DIR-2 and notice and certified copy of a resolution of meeting within 30 days.
The documents required for the appointment are as follows:
As per section 164 of the Companies Act, 2013 for appointment of director states in order to be appointed as the director of the company. The person shall possess certain eligibility criteria. Form DIR-8 provides a detailed disclosure of his qualification under the specified section. The following points are given and are not eligible to become a director:
A director who is employed in the company and manages the day-to-day affairs of the company are known as the executive director. They have deep knowledge of the company. It includes managing directors and whole-time directors.
This category of appointment of director in private company are neither employed nor engaged in day-to-day functions of the company are called Non-executive. This category includes professional directors and nominee directors, etc.
The directors which are specified in the articles at the time of registration of the company. In case it is not specified then it shall be selected by a majority of subscribers as per Table F. In the case, Table F is not applicable then all the subscribers to the memorandum are called the first directors. They are appointed till the subsequent directors are appointed in place.
In the case of companies other than private companies and government companies, the appointment of directors from not less than two third of the directors shall retire by rotation. The articles of association specify the retirement of all the directors of the company by rotation. Not less than one-third of rotational directors are liable to retire either by agreement.
Directors other than Rotational are called Non-rotational Directors.
A Managing director has the substantial powers of managing the company’s business with an agreement with the company.
Every company should have at least one resident director, who has stayed in India for not less than 182 days in the previous calendar year.
These are non-executive directors who help the company to improve credibility and standards. The tenure of the independent director is up to five consecutive years. The appointment of director section 152 of the Companies Act, 2013, at least two independent directors as follows:
There is a certain class of the company listed below:
Every company may appoint an additional director. However, the articles should allow and such a person shall not fail to be selected as director in the general meeting. An additional director is the appointment of director resolution in a board meeting or by passing a resolution by circulation.
The Nominee director is appointed by a third party or by the Central government in case of mismanagement or oppression.
A listed company upon notice of a minimum of 1000 small shareholders or 10% of the total number of the small shareholders, whichever is lower, shall have a director who is elected by small shareholders. They are members who can appoint or remove a director in a company.
These directors are appointed till the next Annual general meeting. In absence of the AGM, the date on which such AGM should have been held.
It refers to the personnel appointed by the board, to fill in for a director who is absent from the nation for more than three months.
There are two situations where a director can be removed after the appointment of director.
Situation 1: If the director has not attended three board meetings in a row
Situation 2: In case the director is removed suo-moto by the board. The director is removed by issuing a special notice under the Companies Act, 2013. The removal of director needs a specific procedure to be followed in order to remove a director of a company is as follows: -
The proposed director must obtain a digital signature certificate and director identification number in Form DIR-3 with the registrar.
The Form DIR-12 is submitted with the DSC of appointed director and payment of prescribed fees with the registrar of companies.
In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.
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