Brief on Appointment of new Directors for a private limited Company – Compliance with the Companies Act – MCA Compliance
Do you know that appointment of Directors to the Board of a Private Limited Company can be done in one day after the passage of such resolution for appointment, provided he or she already had Director Identification Number (DIN)?
If the proposed new Director does not have a DIN, we generally advise to obtain a DIN and then proceed with another Board/ General Meeting (see details below) for a resolution of appointment.
Concerned sections of the Companies Act are 152, 161 etc.
Following can be the broad steps:
1. Obtain a Director Identification Number (DIN) for the proposed new Director if he or she does not have it. (Usually requires 1 day for the digital signature and DIN). Reference: Please note Section 153 of the Companies Act, 2014 & Rule 9(1) of the Companies (Appointment and Qualification Of Directors) Rules, 2014.
2. Check the AoA (Articles of Association) – to see if the Board has powers to appoint an additional Director
- If YES, then simply call for Board Meeting to pass resolution for appointment. Notice for the meeting should contain the DIR -2 (consent Letter), Form MBP-1 ( Disclosure of interest) , DIR -8 and Declaration of no-disqualification. (usually 7 days clear notice for Board Meeting directly to appoint Additional Director – usually not advised to do by resolution by circulation)
- If NO, then a shareholders General Meeting has to be called with 21 days clear notice.This process can be bit time-consuming. Again AoA needs to be checked but for a private limited Company, there is considerable flexibility. A shorter notice meeting may be called, even for 1 days notice– if all shareholders consent). Notice for the meeting should contain the DIR -2 (consent Letter), Form MBP-1 ( Disclosure of interest) , DIR -8 and Declaration of no-disqualification and Explanatory Statement ( preferable)
3. Once the meeting (Board or the shareholders – as applicable) – is over and the resolution passed, as mentioned above, the appointment can be done in1 day. This is done by filing e form DIR – 12. Attachments usually are:
- Certified True Copy of the Resolution passed
- DIR -2 consent form
- Disclosure of interest in MBP-1 (But sometimes it may not be a mandatory attachment)
- DIR-8 and Lack of Disqualification form can also be attached.
- Appointment Letter by Board to the appointed Director
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