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Appointment of Director
The director of a company is a person elected by the shareholders for managing the affairs of the company as per the Memorandum of Association and Articles of Association of the company. Since a company is an artificial judicial person created by law, it can only act through the agency of natural persons. Thus, only living persons can be Directors of a company and the management of a company is entrusted to the Board of Directors. Appointment of Directors can be required for a company from time to time based on the requirements of the shareholders of the business.
The person who is pursuing to become a Director should acquire a Digital Signature Certificate (DSC) and Director Identification Number (DIN). The person who is above 18 years can easily obtain a DIN (Director Identification Number).
Documents required for Appointment of Director
The following documents must be submitted to the FSSAI for obtaining Central FSSAI License:
- Passport
- Identification proof (PAN card)
- Proof of residence (electricity bill, rental agreement, Aadhar Card, voter ID, passport, driving licence)
- Passport size photograph
- Digital signature certificate of the proposed director
- PAN card: mandatory for an Indian applicant
- Passport: mandatory for a foreign applicant.
Types of Directors
There are various types of director of the company, the following are mentioned below:
Executive Director
An executive director is also known as “Whole-time director” he is the one who is a full-time employee for a particular company.
Managing Director
A “Managing Director” means a Director who, by virtue of an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of affairs of the company.
Ordinary Director
The ordinary director is the one who will attend the Board of meeting or some important matters in the company.
hese types of directors are a way different to the Managing director and Executive director.
Alternate director
Usually, alternate Directors are appointed for a person who is Non-Resident Indian (NRI) or for foreign collaborators of a company. Alternate Director is someone appointed by the Board of Directors in a general meeting to act for a Director called the “original director” during his absence.
Nominee Director
Banks and Private Equity investors who grant debt or equity assistance to a company generally impose a condition as to the appointment of their representative on the Board of the concerned Company. These nominated persons are called Nominee Director.
Professional Director
Any of the directors acquiring the professional qualifications and do not have enough interest in financial interest is known as Professional Director.
How to Add a Director to your Company?
The person to be appointed as the new director gives consent to their appointment in the form of a written document, as per the form DIR-2.
A director should obtain a digital signature while adding himself as director. In the case, he is not having DSC he have to apply for a new one and if he has he doesn’t need to get a new one.
A director should obtain a DIN (Directors Identification Number) while adding himself as director. In the case, he is not having DIN he has to apply for a new one and if he has he doesn’t need to get a new one.
A board meeting has to be arranged to pass a resolution to appoint the new Director. Once the resolution is passed the director is appointed.
As soon as the director is appointed the company has to issue the Letter of Appointment to the director.
Once the Letter of Appointment is issued to the Director, the ROC must be informed about this appointment within 30 days.
Who can be the Director of a Company?
The following conditions are applicable when appointing a director
He or she should not have been sentenced to imprisonment for any period, or a fine imposed under a number of statutes.
They should not have been detained or convicted for any period under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
He or she should have completed twenty-five (25) years of age, but be less than the age of seventy (70) years. However, this age limit is not applicable if the appointment is approved by a special resolution passed by the company in general meeting or the approval of the Central Government is obtained.
They should be a managerial person in one or more companies and draws remuneration from one or more companies subject to the ceiling specified in Section III of Part II of Schedule XIII.
He or she should be a resident of India. ‘Resident’ includes a person who has been staying in India for a continuous period of not less than twelve (12) months immediately preceding the date of his or her appointment as a managerial person and who has come to stay in India for taking up employment in India or for carrying on business or vocation in India.
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Appointment of Director FAQ FAQs
Who can be a Director in a Company?
How many Directors can a Company have?
What are the eligibility criteria to be a Director in the company?
Is it necessary to only get a shareholder as a Director of the Company?
What is the procedure for removing a Director from a company?
The procedure for removing a Director from a company is mentioned below:
- 1. A board meeting has to be convened for the removal of directors
- 2. A resolution for the holding of an extraordinary general meeting will be passed along with the resolution for the removal of the director subject to the approval of the shareholders.
- 3. The members will be asked to vote on the same matter and a resolution will be passed.
- 4. After the passing of the resolution, the same procedure will be followed, and the forms DIR – 11 and DIR – 12 will be filed along with the same attachments of the Board Resolution, Ordinary Resolution.
- 5. After the filing of the forms, the name of the director will be struck off from the Ministry of Corporate Affairs website.
What are the forms filled to add a new director in a company?
- DIR-2
- DIR-3
- DIR-12
