Appointment of Directors – Provisions and Procedure for Private Limited

A company registered under Company Act, 2013 with MCA needs to ensure proper compliances as per the relevant said law. A company is a legal entity which needs a board of directors to operate its functions. A board of directors implies a group of individuals who are entrusted with the management of the company.

At the time of incorporation, a Private Limited is required to appointment a minimum of two directors. In case of no appointment made, all the subscribers to memorandum will be considered as first directors. After Incorporation, in case there is a need to appoint a director, the proper procedure needs to be followed.

Prerequisite for the appointment of a director 

1. A person proposed to be appointed as director, must have a Director Identification Number (known as DIN) and a valid DSC to sign the MCA Forms;

2. The person proposed to be appointed as Director must submit the form DIR 2 to give the consent for appointment and declare that he is not disqualified to be appointed as director in the company;

The eligibility to become a director in the company is as follows:

1. The proposed person must be above 21 of age;
2. The individual must be of sound mind;
3. An undischarged bankrupt or adjudged insolvent should not be appointed;
4. A person sentenced and convicted by court for more than six months is not eligible to become a director.

Documents required for appointment:

1. A copy of valid PAN copy 
2. A copy of Identity proof, such as Aadhaar, Voter Id, Passport, etc.
3. Passport Size Photo
4. Digital Signature Certificate (DSC)

During Incorporation process, the person to be appointed must have obtained DSC for sign the Form to subscribe and mention PAN for the process. A DIN will be allotted directly and no diferent form is required to sign or to apply.

And in case of Appointment after the incorporation, the procedure is required to be followed, which is as follows:

1. Firstly,check the AOA of the company to ensure that the appointment must be within the limit of Articles. If required, alter the Articles of Association for the same.

2. The proposed person must obtain a valid DSC.

3. The person proposed, if they don’t have a valid DIN, must apply the same with the Form DIR 3. Also refer the article on Allotment of DIN here https://taxacumen.in/?p=349

4. The proposed person must intimate the Company about his/her active DIN for further process.

5. Also, Submit the consent to act as a director and declare that there is no disqualification to him/her to appointment in DIR 2. No person can be appointed as director unless he/she submits the consent to act as director.

6. The proposed person must intimate the company about his/her interest in other entities. 

7. The appointment of directors takes place in a General Meeting by the shareholders. In case an appointment is being made in between the AGMs, the company can call an Extra General Meeting(EGM) for the purpose. Also, the additional director can be appointed by the directors in the Board Meeting only, if empowered in the AOA. The additional director can be appointed till the next AGM to be held.

8. The company must provide an appointment letter to the person appointed.

9. The company must file the FORM DIR 12 with ROC within 30 days from the event.

The article here is based on the provisions and procedure provided under the Company Act, 2013 in general language. 

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About Author – Deepa Kaintura

I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here.