Appointment of Additional Director

As per Section 149(1): Every Company shall have a Board of Directors Consisting of Individuals as director. (It is clear to understand from this line that only an individual can be director of company. Some persons have doubt that other than individual can be director or not). According to this section Only AN INDIVIDUAL can be director of company. {The Board shall consist of individuals not of other persons like firms, LLP, companies, gods or other legal persons.} 

Minimum No. of Directors as per Section 149(1)(a):

For Public Company -3

For Private company- 2

For OPC-1

Maximum 15 Directors (If company want to appoint more than 15 directors Special Resolution Required to pass in General meeting)- Procedure {Simple Process of Holding of Extra-Ordinary General Meeting, which we use in other Matters also)

♦ Additional Directors: 

Any Individual can be appointed as Additional Directors by a company under section 161 of the New Act.(COMPLETE PROCESS OF APPOINTMENT OF ADDITIONAL DIRECTOR ALONG WITH DRAFT GIVEN BELOW.)

ADDITIONAL DIRECTOR: 

Ensure that the director to be appointed by board of directors exercising the power so conferred in them by the Articles of the companyis not such a person who has failed to get appointed as a director in a general meeting. (If A proposal is made in General Meeting for appointment of a person as Director, if resolution got failed not passed in that meeting and that person fails to get appointed as a director in a general meeting, then that person can’t appoint as additional director). The additional director has to be appointed till date of next AGM or last date on which AGM should have been held, whichever is earlier. 

PROCEDURE: 

• First Check whether Articles (AOA) of the Company contain power/authorization to appoint Additional Director read with Section 161(1) of the Companies Act, 2013. {If there is no provisions in Articles of the Company then Alter the Articles of the company to have enabling clause for appointment of Additional Director.
• Second Check whether such person have DIN No. or Not. If such person doesn’t have DIN No. then Apply for DIN.
• Following documents are require from director to appointment him as additional director.
  • Consent in writing to act as Director in Form DIR-2 pursuant to Rule-8 of Companies (Appointment & Qualification of Director) Rules, 2014-
  • Intimation by Director in form DIR-8 in terms of Companies (Appointment & Qualification of Directors) Rules, 2014, to the effect that he/ she is not disqualified u/s 164(2) of Companies Act, 2014.- 
  • Disclosure of Interest in Form MBP-1 pursuant to Section 184(1) read with Rule 9(1) of Companies (Meetings of Board and its Powers) Rules, 2014. {One thing should be noted MBP-1 should not be dated earlier than date of his/her appointment as Director}. – 

However, if there is nothing to disclose on the part of new Director, even then also require to take form MBP-1 from Director. (NIL disclosure is also a disclosure under section 184(1).

After receiving all the documents from the director:-  

• Call the Board Meeting.
• Pass Resolution for appointment of Additional Director.
• Issue Letter of Appointment.
• File e-form DIR-12 [Along with CTC+ Consent + Letter of Appointment)

Now this person will be Additional Director Till AGM of company. If company want to appoint him as director then regularize the person as director in General Meeting by Share holder Resolution. File form DIR-12 for Change in Designation of Director along with ordinary resolution. 

IF THE SECTION IS VIOLATED

Since the 8-lakh odd companies, sitting with more than 16-lakh directors, may not even be aware of this change of law, what is the provision gets violated? There you have section 159 to take care of – which provides for a jail up to six months, of course with/without a fine too!

(Author is a Company Secretary and can be contacted at [email protected] for suggestion, Comment and Queries )