Applicable Provision: Section 161(1) of Companies Act of 2013r/w Rules of Companies (Appointment and Qualification of Directors) Rules of 2014.
As per Section 161(1), ‘Articles of a company may confer on its Board of Director such power to appoint Additional Director. A person who has failed to be appointed through general meeting shall not be appointed as Additional Director, and an Additional Director shall hold office only up to the date of next Annual General Meeting or the last day, on which the Annual General Meeting should have been held, whichever is earlier.’
But one thing to keep in mind here is that the total number of directors and additional directors should not exceed the maximum strength as fixed by Board.
One other important thing here is that if an additional director, during his tenure had been appointed as managing director of the company, his appointment as managing director also ceases simultaneously with the termination of his directorship at the commencement of the annual general meeting. But, if such a person was elected as a full-fledged director at the annual general meeting, he will continue to be a director of the company and also as its managing director for the period for which his appointment as managing director had been made under Section 196 of the Companies Act, 2013.
1. Ensure that the Articles of the company authorize the Board to appoint an additional director and such appointment is within the maximum limit of directors mentioned in the Articles.
2. Ensure that individual proposed to be appointed as an additional director, does not suffer from any disqualification mentioned.
3. The Board may, if so authorized by articles otherwise, Additional Director may be appointed by passing a resolution at general meeting.
4. Before appointing a person as an additional director, his consent to act as director should be obtained.
5. Check whether the additional director to be appointed in the board meeting has obtained Director Identification Number (DIN). If not then ask such director to make application to Central Government for obtaining DIN and ensure that the Director has intimated his Directors Identification Number to the Company.
6. Send notice in writing to all directors of the company in accordance with Section 173 of the Companies Act, 2013 for holding Board meeting.
7. Hold the Board meeting and pass resolution for appointment of an additional director.
8. The company has to file particulars of director in Form DIR – 12 with the Registrar of Companies within thirty days of the appointment after paying the requisite fee electronically, and following attachments are required to be filed: Letter of Appointment, Declaration by first director, Declaration of the appointee director in Form DIR-2, Evidence of cessation as well as interest in other entities.
9. The particulars of appointment of director should also be given to the stock exchange if the shares of the company are listed.
10. The particulars of the director and other aspects of the director have to be entered by the company in the registers maintained under Sections 170 and 189
11. After appointment the director concerned has to inform other companies in which he is director about his appointment.
12. Ensure that such Form is digitally signed by managing director or manager or secretary of the company and also certified by a Company Secretary or Chartered accountant or Cost accountant in Whole time practice by digitally signing it.
Note: The above-mentioned procedure is Ad verbatim as per the provisions of Companies Act and Rules provided thereunder.
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