Ask Our Expert!

Appointment of Additional Director in The Company

appointment of additional directors

Appointment of Additional Director in the Company is a mandatory procedure to follow. This will require the help of an expert that makes your work more effective. So visit this blog today to grab more information about it.

Section 161(1) of Companies Act 2013: Articles of a company give their Directors the power to nominate anyone, except for someone who is not appointed during the annual general meeting, or as an additional director at any time. The director is in place until the annual general meeting or the expiration of the deadline for scheduling the annual general meeting, whichever comes first.

The most important considerations in appointment of director are:

  • Only Articles of Association allow the Board of Directors to nominate Additional Director.
  • The Articles of Association allow the Board to nominate any person as an Additional Director. This is in addition to the Director who was elected at the general meeting.
  • An additional director may be appointed by a Board resolution or by circulation.
  • The additional director will be in office until the company's next annual general meeting or the date of your next annual general meeting

Procedure for appointment of additional director section 161(1):-

1. The Articles of Association for the Company are required for the Board of Directors to appoint additional Directors. You can amend the Articles of Association to comply with Appointment of Additional Director.

2. Make sure that the person proposed to become director is not also subject to any of the Disqualifications listed in section 164(2) of the Act.

3. Check that the Director Additional proposed by the Board of Directors has not been ineligible to be elected at the general meeting. 

4. Before an additional director appointment of a person, ensure that they are able to obtain an active director identification number (DIN). [Section 152(3)]. Follow the steps to get DIN if he does not have one.

5. It is important that the person proposing to become a Director has provided their DIN number for the Company and a declaration on form DIR.8 stating that he is eligible to be a Director under the Companies Act, 2013. (Sections 152(4), as well as Rule14(1) (Companies (Appointment Board Qualification) Rules 2014[Section152(4) and Rule14(1) (Companies (Appointment Board Qualification) Rules 2014].

6. To appoint someone as Director, you must first obtain his written consent to serve as Director using Form DIR-2. These documents are also included:-

  • Valid ID
  • Valid Address Evidence

7. A: If a resolution is proposed to the BM to be considered:

7.A.1 Not less than seven days’ notice and agenda for Board meeting or an urgent business notice by writing to each director of the company at the address registered in the business's name. [Section 173(3). Follow the procedure to sign and issue a notice of board meeting for appointment of additional director at Board Meetings [Section 173(3)].

7.A.2 Call a Board of Directors meeting

The Board Resolution is required to appoint an additional director. This position will be held until the next Annual General Meeting of the corporation or the date at which the next Annual General Meeting takes place, whichever comes first.

The Directors and the Company Secretary must sign and submit the required form to the Registrar of Companies. They also need to perform any acts, deeds or other things necessary to implement the Board's decision.

7.B If resolutions are proposed for appointment that is to be reviewed by circulations:

7.B.1 Paragraph 6.1.1 in the Secretarial Standards

7.B.2 The draft resolution for director appointment of additional director to hold the office upto the date of the next Annual general meeting of the company or due date of next Annual General Meeting, whichever is earlier together with necessary papers shall be sent to all the Directors individually on the same day by hand/speed post/registered post/courier/e-mail/any other recognized electronic means to his email or postal address registered with the Company and in the absence of such details, to any address appearing in DIN registration details of the concerned Director. 

7.B.3 The proposed agenda for appointment of additional director must be explained with an explanatory statement. This note should outline the details of the plan and any relevant information that will help Directors understand the proposed agenda's purpose, scope, and implications. It also should include any concerns or other interests that Director have previously made public, and the draft Resolution that is being proposed. The note must specify how Directors will consent or decline to the Resolution and the due date for responses. 

7. B.4 Directors should be allowed to respond within seven days of publication of the draft Resolution. 

7.B.5 When a minimum of 1/3rd members are present; the Resolution must be circulated to the Board. 

7.B.6 Resolutions are considered to be adopted when they are ratified by the majority of Directors entitled to vote on them. The Resolution will also be considered as passed if it is signed by all Directors. 

7.B.7 All resolutions passed by circulation must be recorded at the next Meeting of the Board.

8. The form MBP-1 is used to obtain the declaration of the Director regarding his interests in other organizations. This can be done within 30 days from the date of Board Meeting where he becomes a director. Sections 184(1) and 189(2) of Companies Act, 2013 Additionally, Rule 9(1) of Companies (Meetings of Board and its Powers Rules, 2014

9. Return with details of the Appointment of Additional Director, using the E-Form DIR-12, along with the appropriate fee specified by the Companies (Registration Offices & Fees) Rules (2014) within 30 days from the date of such appointment. (Section 172(2) and Rules 8 & 18 in the Companies (Appointment and Qualification of Directors] Rules (2014) [Section 170(2), Rule 8 & 18 of the Companies' (Appoint) Rules (Appointment and Qualification of Directors) Rules 2014]

These documents and information are required to file the E-Form number. DIR-12:-

(a) Information regarding the interests of other organizations.

(b) Extract of the Board Resolution to Appoint

(c) Consent of the director appointed on Form No. DIR-2, with self-attested ID and Address Evidence

(d) Appointment Letter

(e) Other documents if they are relevant or required.

10. To make an entry in the Register of Directors and key personnel in management, and their shares, get the following information from Director:

(a) Director Identification number

(b) The full name and surname;

(c) Father's and mother's names, spouse's names (if married), and full surnames.

(d) The date you were born is necessary for Appointment of Additional Director;

(d) Address for Residence (present and permanent);

(e) The nationality (including the origin's nationality, if it is not the nationality is other);

(f) occupation;

(g) The office of Director or key managerial personnel that is held or surrendered by any other body corporate or organization.

(h) Information about securities held by him in the company and its holding companies, subsidiaries, affiliates, and associated companies.

(i) The number, description, and nominal values of the securities

(ii) the date of purchase;

(iii) the amount or any other consideration paid for it.

(iv) The date of disposal and the price, as well as any other considerations.

11. Any other company where the director has been appointed must be notified by the director.

12. Draft minutes and distribute them to the attendees from the Board Meeting within fifteen days of when the end of the Board Meeting by speed post/speed mail/courier/handwritten note to directors for their feedback. Follow the procedure for the preparation, distribution, and signing of Board minutes for appointment of additional director.

13. All officials and people affected should be informed. officials regarding the appointment of a director, such as Central Excise Authorities and Customs Authorities. Sales Tax Authorities. Service tax Department. Chief Inspector of Factories. Regional Provident Fund commissioner.