Appointment, Role & Qualifications of Directors | Companies Act, 2013

Every company shall have:-

Type of Company

Minimum No. of Directors

In case of PUBLIC Company

3

In case of PRIVATE Company

2

In case of ONE PERSON Company

1

Maximum No. of Directors: 15

Provided that a company may appoint more than 15 directors after passing a special resolution

Proviso to section 149(1) read with Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014 provides that the following class of companies shall appoint at least one woman director-

1) Every Listed Company

2) Every Public Company having →

Paid up share Capital of

100 crores or more ; or

Turnover of

300 crores or more

For purpose of Paid up share capital or turnover as the case may be figure on last date of latest audited financial statements shall be taken into account.

Every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year

Provided that in case of a newly incorporated company the requirement under this sub-section shall apply proportionately at the end of the financial year in which it is incorporated.

Every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies.

Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014 provides that the following class or classes of companies shall have at least two directors as independent directors

The Public Companies having  →

i) paid up share capital of 10 crore rupees or more; or

ii) turnover of 100 crore rupees or more; or

iii) aggregate, outstanding loans, debentures and deposits, exceeding 50 crore rupees

Appointment of first Director Section 152(1)

Where no provision is made in the articles of a company for the appointment of the first director, the subscribers to the memorandum who are individuals shall be deemed to be the first directors of the company until the directors are duly appointed and

In case of a One Person Company an individual being member shall be deemed to be its first director until the director or directors are duly appointed by the member in accordance with the provisions of this section.

Appointment of Subsequent Directors Section 152(2)

Save as otherwise expressly provided in this Act, every director shall be appointed by the company in general meeting.

Requirement Of DIN Section 152 (3)

No person shall be appointed as a director of a company unless he has been allotted the Director Identification Number under section 154

Furnishing of DIN and Declaration Section 152 (4)

Every person proposed to be appointed as a director by the company in general meeting or otherwise, shall furnish his Director Identification Number (or such other number as may be prescribed under section 153) and a declaration that he is not disqualified to become a director under section 164 of this Act

Consent to Act as Director Section 152(5) & Rule 8 Companies (Appointment and Qualification of Directors) Rules., 2014

A person appointed as a director shall not act as a director unless he gives his consent to hold the office as director and such consent has been filed with the Registrar within thirty days of his appointment in such manner as may be prescribed.

The written consent shall be given on or before the appointment to the company a consent in writing to act as such in Form DIR-2.

Provided that the company shall, within thirty days of the appointment of a director, file such consent with the Registrar in Form DIR-12 along with Prescribed fees.

Right of Persons other than Retiring Directors to stand for Directorship

(Section 160)

A person who is not a retiring director terms of Section 152 shall, subject to the provisions of this Act, be eligible for appointment to the office of a director at any general meeting, if he, or some member intending to propose him as a director, has, not less than fourteen days before the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as the case may be, the intention of such member to propose him as a candidate for that office, along with the deposit of one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the case may be, to the member, if the person proposed gets elected as a director or gets more than 25% of total valid votes cast either on show of hands or on poll on such resolution.

Exemptions:

Section160 shall not apply to Private Company, Section 8 Company, and other specified companies

Steps

Procedure

Documents/Forms

1.

Prior consent of the Director has to be obtained in Form DIR-2

Form DIR-2 Consent of Director

2.

Issue notice for calling of Board Meeting at least 7 days before the meeting. A shorter notice can be issued in case of urgent business.

Board Meeting Notice

3.

Hold a meeting of Board of Directors of the Company to discuss the agenda and to decide on the name of Proposed Director and pass Board Resolution –

• To consider the Appointment of New Director/Re-appointment of Retiring Directors including Regularization of an Additional Director subject to approval of members at general meeting.

• take note of disclousre of interest of Director

• to authorize CS/Director of Company to sign and file relevant form with ROC and to do such acts and deeds as may be necessary to give effect to Boards Decision

Board Resolution

4.

E-Form DIR-12 has to be filed with ROC, by company, within 30 days of appointment

e-Form DIR-12

Attachments:

1. Certified True Copy of Board Resolution

2. Letter of Appointment

3. DIR-2 for consent to act as director

4. Declaration of Interest of Director in Form MBP -1

5. Form DIR-8 – Intimation by Director for not possessing disqualification under section 164