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Appointment of Directors2022-09-26T13:27:16+05:30

Appointment of Directors in Company

An individual person can be appointed as a Director in the Board of the Company to manage the day-to-day affairs and carry out business transactions after following the due process of law.

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    Appointment of Directors in Company

    Directors in a company are appointed by the shareholder/owners to manage the affairs of the company. The company being an artificial entity requires a natural person to carry out the business activities and all other day-to-day affairs, so directors are appointed in order to manage the activities of companies accordingly. Board of Director are the main reasons behind the success and profitability of the business.

    The initial director (known as First Directors) are appointed by the company at the time of incorporation through Articles of Association (AOA) and thereafter additional directors can be appointed by the company at any point of time as per the requirements by the shareholders. AOA of the company shall have the provisions governing 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?

    There are certain disqualifications for a person which shall bar him from being appointed as a director of company which is mentioned under the act. A person will not be appointed as director if he satisfies 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 court for an offence and imprisoned for at least 6 months and post imprisonment 5 years has not been elapsed.
    • He/she has been convicted of any offence and sentenced in for a period of seven years or more, he shall not be eligible to be appointed as a director in any company.
    • Court and tribunal has declared him disqualified for appointment of director.
    • Not paid any calls on shares of company held by him.
    • Convicted of any offence dealing with related party transaction and 5 years has not elapsed
    • He does not have Director Identification Number (DIN) or holds a Deactivated DIN

    Advantages of Appointment of Directors in Company

    • Legal Requirement

      Every company is required to appoint one resident director, who shall be a permanent resident of India on the board of the company. Therefore, Companies having foreign national or NRI’s as promoter/director always prefer addition of atleast one resident director to comply with the mandatory legal requirements.

    • Hiring of new talent or experts

      The company can easily appoint new talent, experts or professionals as a Director in the Company for better efficiency and development of operations of the company.

    • Gain superior control

      The majority group of shareholders generally exercise control and power through Board of Directors. As a director is responsible for 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 company where it passes on directorship roles to aspiring persons in the company. It ensures that business of company continue to run smoothly after the retirement or leave by  the directors of the company.

    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 shall collect the required information and documents required as per the checklist. We shall verify and confirm the documents and information provided.

    • Application for Digital Signature Certificate (DSC)

      On receipt of required documents, we shall apply Digital Signature Certificate (DSC) for the applicant/proposed director for digitally signing the forms. If the applicant already has DSC, then this step can be skipped.

    • Application for Director Identification Number (DIN)

      After the DSC is generated, we shall make an application for obtaining Director Identification Number (DIN) of the applicant/proposed director, after the DIN is obtained for the director then we would proceed towards the appointment part. If the applicant already has DIN, then this step can be skipped.

    • Filing of Form DIR-12 for Appointment of Director

      In the next step, we shall prepare and submit Form DIR-12 along with the required attachment, documents, and pay the required fees to the concerned Registrar of Companies (ROC).

    • Approval for Appointment by ROC

      An intimation of approval via e-mail shall be sent after the form is processed by Registrar of Companies (ROC).

    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?2021-10-10T18:29:08+05:30

    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?2021-10-10T18:28:41+05:30

    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)?2021-10-10T18:27:28+05:30

    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?2021-10-10T18:22:12+05:30

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

    Who appoints the director in a company?2021-10-10T18:21:38+05:30

    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?2021-10-10T18:20:39+05:30

    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?2021-10-10T18:18:30+05:30

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

    Whether shareholders approval is required for appointing director in a company?2021-10-10T18:18:02+05:30

    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?2021-10-10T18:17:27+05:30

    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?2021-10-10T18:16:53+05:30

    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?2021-10-10T18:13:47+05:30

    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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