When you decide to add a Director to your Company

Building a Company is at hands of the super team (we call it the Board of Directors) that your company forms, Director is the most important person required for the successful running of Company. Director is not only liable for success but also personally liable in case of any breach either of law or trust done by the company. This Board of Directors may require timely shuffle, as the business grows, Company may require new Directors to manage and coordinate their day to day affairs.

Who is a Director?

There is no exhaustive definition of the term 'director' as per The Companies Act, 2013. Section 2 (34) of the Act prescribed that 'director' means a director appointed to the Board of a company. A director is a person appointed to perform the duties and functions of the director of a company in accordance with the provisions of the Companies Act, 2013.

What are the different categories of Directors under Companies Act, 2013?

Companies Act 2013 provides for following types of Director how to add a director to your company   What is the required number of directors in a company?

Section 149(1) of the Companies Act, 2013 requires that every company shall have a minimum number of 3 directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company. A company can appoint maximum 15 fifteen directors. A company may appoint more than fifteen directors after passing a special resolution in general meeting.

What are the documents required to become a director?

  • DIN (Director Identification Number);
  • Income-tax PAN;
  • Personal Information
  • Details of Nationality;
  • Occupation;
  • Full Address with PIN Code (present and permanent)
  • Educational and professional qualifications;
  • Any legal proceedings initiated or pending against such person;
  • List of limited liability partnerships in which he is or was a designated partner along with Name of the LLP, Nature of Industry; and Duration- with dates;
  • List of companies in which he is or was director along with Name of the company; Nature of industry; Nature of directorship? Executive / Non-executive / Independent / Nominee Director; and Duration ? with dates.

What's the procedure to appoint a new director?

Section 152 lays down the following procedure:

  • Every director is appointed by the company in general meeting.
  • Director Identification Number is compulsory for the appointment of a director of a company. A person who is intended to become a director must apply to the Registrar for obtaining a Director Identification Number (DIN) in Form No DIR-3.
  • Every person proposed to be appointed as a director shall furnish his Director Identification Number and a declaration that he is not disqualified from becoming a director under the Act.
  • A person appointed as a director shall on or before the appointment give his consent to hold the office of director in physical form DIR-2e. Consent to act as a director of a company.
  • Company shall file Form DIR-12 (particulars of appointment of directors and KMP along with the form DIR-2 as an attachment within 30 days of the appointment of a director, along with required fees.
  • In case Registrar is not informed of his appointment within the specified period, he is punishable by imprisonment for a period of six months or may have to a pay fine which may extend to fifty thousand rupees and if the noncompliance continues he might have to pay an additional fine of rupees five hundred per day of non-compliance.

When is the director disqualified?

Section 164 debars any such person to be appointed as a Director who

  • has not got the DIN.
  • is of unsound mind and stands so declared by a competent court;
  • is an undischarged insolvent;
  • has applied to be adjudicated as an insolvent and his application is pending;
  • has been convicted by a court of any offense and sentenced to imprisonment for a period not less than six months and a period of five years has not elapsed from the date of expiry of the sentence.
  • If a person has been convicted of any offense and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director in any company;
  • an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;
  • he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;
  • has been convicted of the offense dealing with related party transactions under section 188 at any time during the last preceding five years;

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