Appointment of Director in Company

Name: Appointment of Directors in Company
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Appointment of Directors in Company

Shareholders/owners appoint directors in a company to manage its affairs since the company, being an artificial entity, requires natural persons to conduct business activities and handle day-to-day affairs. The Board of Directors plays a crucial role in ensuring the success and profitability of the business.

The company appoints the initial directors, known as First Directors, during its incorporation through the Articles of Association (AOA). Subsequently, additional directors can be appointed by the company based on shareholder requirements. The AOA of the company contains provisions governing the addition or removal of directors.

Who shall be appointed as a Director of Company?

There are no specific qualifications required for appointment of a person as director of company under the law.
However, only a natural person can be appointed in a company and any body-corporate, association, firm or any other artificial person cannot be appointed as director.
A person should be above 18 years of age and shall have a valid Director Identification Number (DIN)
Further, the person should not be Disqualified from being appointed as Director

Who cannot be appointed as a Director of Company?

The act specifies certain disqualifications that would prevent a person from being appointed as a director of a company. A person will not be eligible for directorship if they meet any of the following conditions:

He is of unsound mind
He is an undischarged insolvent
He is adjudged insolvent/applied to be an insolvent
He is convicted by a court for an offence and imprisoned for at least 6 months and post imprisonment for 5 years has not elapsed.
If he/she has been convicted of any offence and sentenced for a period of seven years or more, he shall not be eligible to be appointed as a director in any company.
The court and tribunal have declared him disqualified for appointment as director.
Not paid any calls on shares of the company held by him.
Convicted of any offence dealing with related party transaction and 5 years have not elapsed
He does not have Director Identification Number (DIN) or holds a Deactivated DIN

Advantages of Appointment of Directors in Company

Hiring of new talent or experts
The company can effortlessly appoint new talent, experts, or professionals as directors to enhance the efficiency and development of its operations.
Gain superior control
The majority group of shareholders generally exercise control and power through the Board of Directors. Since a director is responsible for the day-to-day affairs of a company, the group stakeholders always prefer to be appointed as directors on the Board.
Succession Planning of the Company
Succession planning is a practice followed by a company to pass on directorship roles to aspiring individuals within the organization. This process ensures the smooth continuation of the company’s business after the retirement or departure of current directors.

Minimum Requirements of Appointment of Directors in Company

Digital Signature Certificate (DSC) of the Applicant
Director Identification Number (DIN) of Applicant
Consent by the applicant to act as Director of the Company
Approval by the Board of Director or Shareholders of Company on Applicant’s Appointment.

What Is Included In Our Appointment of Directors in Company package?

Consultation on process of Appointment of Director
Verification of Documents and Information provided
Preparation and Filing of Form DIR-12 for Appointment of Director
Government Challan and Acknowledgement number

Procedure for Appointment of Directors in Company

Collection of required Information and Documents
In the first step, we will collect the necessary information and documents as per the checklist. Subsequently, we will verify and confirm the provided documents and information.
Application for Digital Signature Certificate (DSC)
Once we receive the required documents, we will proceed to apply for the Digital Signature Certificate (DSC) on behalf of the applicant/proposed director to enable them to digitally sign the forms. If the applicant already possesses a DSC, this step can be skipped.
Application for Director Identification Number (DIN)
Once the DSC is generated, we will proceed to apply for obtaining the Director Identification Number (DIN) for the applicant/proposed director. After obtaining the DIN for the director, we will proceed with the appointment process. If the applicant already has a DIN, this step can be skipped.
Filing of Form DIR-12 for Appointment of Director
In the next step, we will prepare and submit Form DIR-12 to the concerned Registrar of Companies (ROC), along with the required attachments, documents, and payment of the necessary fees.
Approval for Appointment by ROC
After processing the form, the Registrar of Companies (ROC) will send an intimation of approval via e-mail.

Documents Required for Appointment of Directors in Company

Proof of Identity — Income Tax PAN for (Mandatory for Indian Citizen) and Passport (Mandatory for Foreign Citizen)
Proof of permanent and present address (Any One): Passport / Driving License / Election card / Aadhaar card / Ration card / Electricity bill / Telephone bill.
In case of Indian Applicant, the documents should not be older than 2 months from the date of filing of the form and in case of foreign applicant, address proof should not be older than 1 year from the date of filing of the Form.
Passport sized Photograph of the Applicant
Any other Document as may be required

FAQ

How much time is needed for appointment of director in a company?Chandan Todi2021-10-10T18:29:08+05:30

How much time is needed for appointment of director in a company?

On average, it takes 4-5 working days for appointment of director by filling form DIR-12. However, this is also dependent on approval of government authority.

Is physical presence of director required during the process of appointment of director?Chandan Todi2021-10-10T18:28:41+05:30

Is physical presence of director required during the process of appointment of director?

No, the process is a completely online process. All the required documents are filed electronically, so you would not need to be physically present at all. You would just need to send us scanned copies of all the required documents & forms.

What is Director Identification Number (DIN)?Chandan Todi2021-10-10T18:27:28+05:30

What is Director Identification Number (DIN)?

DIN is a unique Identification Number allotted to an individual who is appointed as a director of a company, upon making an application in form DIR-3 pursuant to section 153 & 154 of the Companies Act, 2013.

Is DIN mandatory for a person to be appointed as director?Chandan Todi2021-10-10T18:22:12+05:30

Is DIN mandatory for a person to be appointed as director?

Yes, an individual should hold a valid DIN before being appointed as a director in any company.

Who appoints the director in a company?Chandan Todi2021-10-10T18:21:38+05:30

Who appoints the director in a company?

The shareholder of the company can appoint the director in a company as per the requirement under the meeting duly held. The board of directors can also appoint additional directors (by the articles of association) and they shall hold office only upto the date of next annual general meeting or the last date on which the annual general meeting should have been held (whichever is earlier). Such director can be regularised in the AGM with the consent of shareholders.

I am already a director in a company, can I become director in another company also?Chandan Todi2021-10-10T18:20:39+05:30

I am already a director in a company, can I become director in another company also?

Yes, any individual holding a valid DIN can become a director in a maximum of 20 companies at a time.

Can a shareholder become Director of a Company?Chandan Todi2021-10-10T18:18:30+05:30

Can a shareholder become Director of a Company?

Yes, a shareholder can become a director of a company.

Whether shareholders approval is required for appointing director in a company?Chandan Todi2021-10-10T18:18:02+05:30

Whether shareholders approval is required for appointing director in a company?

Yes, shareholders approval under the general meeting is required for appointing director in a company.

Can a person holding NRI status also become director of a company?Chandan Todi2021-10-10T18:17:27+05:30

Can a person holding NRI status also become director of a company?

Yes, any individual whether resident in India or not can become a director of a company in India with the required documents.

Can a non-Indian citizen / foreign person become a director of a company in India?Chandan Todi2021-10-10T18:16:53+05:30

Can a non-Indian citizen / foreign person become a director of a company in India?

Yes, any non-Indian citizen or foreign person can also become a director of a company in India with the required documents.

Who appoints an Additional Director?Chandan Todi2021-10-10T18:13:47+05:30

Who appoints an Additional Director?

The board of directors can appoint additional directors (by the articles of association) and they shall hold office only upto the date of next annual general meeting or the last date on which the annual general meeting should have been held (whichever is earlier). Such director can be regularised in the AGM with the consent of shareholders.

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