Private Limited – TaxAcumen

Duties of Directors of the Company

by DEEPA KAINTURA February 24, 2025

The companies registered under the Companies Act, 2013, have a separate legal entity. The operations are managed by the Board of Directors, and not the owners, subject to the provisions of said Act. Along with the powers of management, directors have been assigned with some duties and responsibilities, provided in the said Act.

Section 166 of the Act, deals with the duties of the directors, towards the company. Here, duties specified under the law are as mentioned below :

1. Act according to Articles of Association

Every director of the company shall act, according to the terms decided under Article of Association. The powers given in the Articles cannot exceed, unless the provisions permitted.

2. Act in the interest of the company

All the directors shall act in good faith in order to promote the objects of the company, for the benefits of its members, as a whole, and in the best interests of the company, employees, the shareholders, the community, and for the protection of the environment.

3. Don’t make secret profits

A director shall not achieve, or attempt to achieve any undue gain or advantage, either to himself or to his relatives, partners, or his associates, and if found guilty, he shall be liable to pay an amount equal to that gain.

4. Due care and skill

Every director needs to ensure that the due care, skills and diligence is in exercise, while taking the decisions for the company. Also, independent judgement should be exercised.

5. Confidentiality

The directors are the core management personnel of the company. They come to know various sensitive, confidential information, while exercising their duties. This information can damage the company, in case of disclosure. Hence, there is a need to maintain confidentiality for the sensitive information of the company.

6. Attend meetings

As required by law, directors need to attend the meeting conducted for the operations of the company. He must provide valuable ideas, inputs for the smooth functioning and betterment of the company, whenever required.

7. Conflict of Interest

Directors must know that the company interests are more important than his personal interests. He should not be involved in such a situation, in which he may have any direct or indirect interest that conflicts, or possibly may conflict, to the interest of the company.

8. Assignment of his office

Director can not assign his office to any person. Such assignment, if done, shall be void. Directors must fulfil his/her duties towards the Company, otherwise he/she will be liable to be punished according to the provisions of law.

Also read the Article on Appointment of Director

Appointment of Directors – Provisions and Procedure for Private Limited

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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.

Company Law

Appointment of Directors – Provisions and Procedure for Private Limited

by DEEPA KAINTURA February 23, 2025

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

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;

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:

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

Documents required for appointment:

A copy of valid PAN copy
A copy of Identity proof, such as Aadhaar, Voter Id, Passport, etc.
Passport Size Photo
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:

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.

The proposed person must obtain a valid DSC.

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

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

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.

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

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.

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

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.