Add Directors

A director is an individual who is appointed to the board of a company. As per the companies Act, 2013, a person shall have a valid, active Director Identification Number (DIN) and not disqualified to act as director at the time of appointment on the board of the company. The Board of Directors of the company is entrusted with the task of managing the affairs and performs the day to day activities of the company by the shareholders of the company.

The shareholders of the company have the powers to appoint the directors on the board of the company; however the Articles of Association of the company may give powers to the board of directors to appoint additional director on board, who shall hold office up to the date of next annual general meeting of the company.

For private company minimum two directors and for public minimum three directors are mandatory and one of them shall be a resident director.

A company can appoint maximum 15 directors on the board, for appointment of more than 15 directors a special resolution is required to be passed by the shareholders of the company.

The company can appoint different type of directors on the board of the company as per the requirements. Types of directors can be appointed on the board of the company are:

1. Director
2. Additional Director
3. Alternate Director
4. Independent Director
5. Woman Director
6. Nominee Directors
7. Whole Time Director
8. Managing Director etc.

The shareholders of a company have the powers and authority to appoint the director on the board of the company as and when required for managing the affairs of the company. Both private and public companies are required to have minimum number of directors on the board at all the time.

Appointment of Director on Board of a company:

• Article of Association: Check the article related to Board of Directors in Articles of association of the Company.
• Director Identification number (DIN): The proposed director shall have a Director Identification number (DIN), in case not having DIN, then the person shall apply for DSC and an application for DIN shall be made in form DIR-3.
• Consent letter: The consent for appointment is to be obtained from the proposed director in form DIR-2.
• Board Meeting: A board meeting for recommending the appointment of proposed director to the shareholders shall be called.
• Calling and Holding of General Meeting: The board of directors of the company shall call a meeting of the shareholders for appointment of director. A resolution for appointment shall be passed at the meeting.
• DIR-12: Form DIR-12 for appointment of director shall be filed by the company within 30 days from the date of appointment with all the attachments.

Additional Director is the director appointed under Section 161 of the Companies Act, 2013.  The Articles of Association of a Company, empowers the board of directors to appoint a person having active director identification number as an additional director. He can be appointed by the board at any time and shall holds office as director till the annual general meeting.

Appointment of Additional Director on Board of the company:

• Article of Association: Check the article related to Board of Directors in Articles of association of the Company.
• Director Identification number (DIN): The proposed director shall have a Director Identification number (DIN), in case not having DIN, then the person shall apply for DSC and an application for DIN shall be made in form DIR-3.
• Consent letter: The consent for appointment is to be obtained from the proposed director in form DIR-2.
• Board Meeting: A board meeting for appointment of proposed director shall be called and in that meeting a resolution for appointment shall be passed.
• DIR-12: Form DIR-12 for appointment of additional director shall be filed by the company within 30 days from the date of appointment with all the attachments.

Alternate Director is the director appointed under Section 161(2) of the Companies Act, 2013. The Articles of Association of a Company, empowers the board of directors to appoint a person having valid director identification number as an alternate director in place of an existing director in case of absence of original director for a period not less than 3 Months from India.

Alternate director vacate the office when the original director in whose place he has been appointed returns to India.

Appointment of Alternate Director on Board of the company:

• Article of Association: Check the article related to Board of Directors in Articles of association of the Company.
• Director Identification number (DIN): The proposed director shall have a Director Identification number (DIN), in case not having DIN, then the person shall apply for DSC and an application for DIN shall be made in form DIR-3.
• Consent letter: The consent for appointment is to be obtained from the proposed director in form DIR-2.
• Board Meeting: A board meeting for appointment of proposed director shall be called and in that meeting a resolution for appointment shall be passed.
• DIR-12: Form DIR-12 for appointment of additional director shall be filed by the company within 30 days from the date of appointment with all the attachments.

An Independent director is a director who is not a promoter or related to promoters of a company. He is not associated in any manner with any of the associate, subsidiary or holding company of a company. He is a person who possesses the expertise and experience in the field of accountancy or business of the company.

Classes of Companies required appointing Independent Director:

1. All Listed Companies
2. Public Companies having paid up share capital of rupees Ten Crores or more
3. Public Companies having turnover of 100 Crores or more
4. Public companies having more than 50 Crores outstanding loans, debentures and deposit more than 50 Crores

Appointment of Independent Director: On recommendation of the board, the shareholders of the company appoint the independent director. The procedure for appointment of director depends on the type of company in which they are appointed.

Appointment of woman director on the board of a company is a relatively new concept introduced in Companies Act, 2013. This is a step towards creating diversity on the board of a company and more woman representation at the management level.

The following companies shall appoint at least one woman director on its board:-

(i) every listed company;

(ii) every other public company having –

(a) paid–up share capital of one hundred crore rupees or more; or

(b) turnover of three hundred crore rupees or more,

Appointment of Woman Director on Board of a company: The procedure for appointment of woman director is same as appointment of any other director or additional director on the board of a company.

They are also liable for retire by rotation and their appointment, if made by the board of directors, shall be approved by the shareholders at the general meeting.

In case of resignation of woman director before the expiry of her tenure, then the same shall be filled by the board immediately in the next board meeting or within 3 months of her resignation whichever is later.

Director nominated on the board of a company by the financial institution, banks, government, any other authority or person is called as nominee directors. They are the representative of the institutions, banks, government, any other authority or person on the board of the company to represent the interests. These directors are nominated by the institution and cease to be a director in case of withdrawal of nomination.

Appointment of Nominee Director on Board of a company: The procedure for appointment of nominee director is same as appointment of any other director or additional director on the board of a company.

They are also liable for retire by rotation and their appointment, if made by the board of directors, shall be approved by the shareholders at the general meeting.

In case of resignation of woman director before the expiry of her tenure, then the same shall be filled by the board immediately in the next board meeting or within 3 months of her resignation whichever is later.

Managing Director is a director appointed on the board of the company by the shareholders and is entrusted with substantial powers of management of the affairs of the company. Whole time director is a director in whole time employment of a company. Both are appointed in the capacity of Key Managerial Personnel.

The term of appointment, remuneration, tenure on the board etc., are all decided and approved by the shareholders at the general meeting.

Appointment of Managing Director/Whole Time Director is not applicable to all type of companies. Following companies have to appoint a managing director / whole time director:

• Every listed company and
• Every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel.