Additional Director under Companies Act, 2013
Section 161(1) of the Companies Act, 2013 speaks about the appointment of the additional director. The Board of Directors may appoint an additional director to the Board only if they have given power in articles of association. The additional director shall hold office from the date of appointment till the date of the ensuing annual general meeting or the last date on which annual general meeting should have been held, whichever is earlier.
In case the articles of association of a company who wishes to appoint an additional director, it has to adopt the regulation 66 contained in Table F OF Schedule I of the Companies Act, 2013.
Regulation 66 of Table F of Schedule I provides as below:
a) Subject to the powers of section 149 of the act, the board shall have power at any time and from time to time to appoint a person as an additional director provided the number of directors and additional directors together shall not exceed the maximum number of directors as fixed by articles.
b) Such person shall hold office only up to the date of the next annual general meeting of the company but shall be eligible for appointment by the company as a director at that meeting subject to the provisions of the Act.
1. Obtain consent to act as a director in form DIR – 2, disclosure of interest as per section 184 in MBP – 1 and declaration under section 164(2) that he is not disqualified to act as a director in DIR – 8.
2. Held the board meeting and pass the resolution for appointment of additional director.
3. File the form DIR 12 along with the certified true copy of the resolution passed to the Registrar within 30 days of appointment.
4. It is to be further noted that appointment of additional director can also be made through resolution by circulation.
Though appointed on a temporary basis, an additional director is vested with the same powers of a normal director. The additional director must utilize his/her powers in the best interest of the company and the shareholders. The additional director can also be appointed as the company’s managing director.
The person appointed as additional director shall hold office from the date of his appointment to the date of the ensuing annual general meeting or date on which annual general meeting to be held, whichever is later.
What happens if the annual general meeting is not held on the due date?
The additional director so appointed has to vacate the office if the general meeting was not held on the due date.
1. In case if the company wishes to regularize the additional director in the annual general meeting, it can do so by passing a resolution to the extent.
2. The company has to mention the candidature of the additional director along with the notice to annual general meeting in explanatory statement under section 102 of the Companies Act, 2013.
3. If the shareholders approve the resolution in the annual general meeting, then the additional director will be appointed as normal director.
4. Form DIR 12 needs to be filed within 30 days from the date of annual general meeting intimating the designation change of the additional director.