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The following are the most frequently cited reasons for adding or changing directors in a business:
  • To recruit new talent
  • There will be no dilution of ownership
  • Existing directors' inefficiency
  • To adhere to the statutory cap
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Appoint a Director

An Overview- Appointment of Directors in a company

As per the Companies Act, 2013, the AoA (Articles of Association) is the charter document which authorised Board of Directors to remove or appoint directors in the company.

A company's director is a person chosen by the shareholders to oversee the company's business in accordance with the MOA and AOA. As a result, a director must be a living person, and the company's management is committed to its Board of Directors. The appointment of Directors may be necessary from time to time, depending on the needs of the company's shareholders.

The shareholders appoint two-thirds of the total directors in a public or private company. The remaining one-third of the directors are appointed in accordance with the Articles of Association's rules.

The mechanism for appointing any and all directors might be prescribed by the Articles of Association of a private company. If the Articles of Association remain silent, the shareholders must appoint the directors.

Minimum and Maximum number of Directors

As per the Companies Act 2013, the total numbers of directors required for the companies are-

Private Limited Company

Every private limited company must have at least two directors.
A company's maximum number of directors can be 15.

Public Company

Every public limited company must have at least three directors.
A company's maximum number of directors can be 15.

One Person Company

Every one person company must have at least one directors.
A company's maximum number of directors can be 15.

After passing a special resolution in a general meeting of shareholders, any company may appoint more than 15 directors.

Documents required for the appointment of directors

Documents required for the appointment of directors are-

  • PAN Card
  • Address proof (electricity bill, rental agreement, Aadhar Card, Voter ID, Passport, Driving License)
  • Passport size photo
  • DSC (Digital Signature Certificate) of the proposed Director

NOTE:

1. PAN card is Mandatory for an Indian Applicant
2. Passport is Mandatory for a foreign Applicant

Reason for adding/ changing director

The following are the most frequently cited reasons for adding or changing directors in a business:

To recruit new talent

As your business develops and evolves, you will require fresh people to meet evolving requirements and problems. It's reasonable to wish to expand or alter top-level management.

There will be no dilution of ownership

Directors are generally accountable for a company's day-to-day operations. By adding or nominating a new director, owners can delegate more operational tasks without relinquishing strategic control.

Existing directors' inefficiency

It could be that the current directors are unable to handle the demands of the job, or that they are retiring, having family troubles, suffering from physical ailments, or for other personal reasons. In such circumstances, additional directors must be added.

To adhere to the statutory cap

Each form of business requires a specific number of directors. If an existing director dies unexpectedly or decides to retire, you will need to appoint another director to your firm.

Director's Appointment Procedure

Adding a director is more harder than one may believe.

  • Step 1: Determine whether the company's articles of incorporation (AOA) permit the inclusion of an additional director. If the business's Articles of Association do not contain such provisions, then change the company's Articles of Association to allow for the inclusion of an additional company director.
  • Step 2: The proposed director must sign Form DIR-2 indicating his or her consent to serve as director.
  • Step 3: The company's board of directors must approve a resolution designating a specific individual as a director.
  • Step 4: Obtain the new director's DSC (digital signature certificate) and DIN (director identification number).
  • Step 5: Gather the necessary documents and information and submit Form DIR-2, Form DIR-12, and Form DIR-8 to the ROC.

FAQs on Appointment of Directors

To intimate the ROC about any changes in the particulars of the Director.
Within 30 days of appointment by filing DIR-12.
Anyone who is eighteen years old and an individual not disqualified under section 164 of the Companies Act, 2013, can be appointed as a director in the company.
A person can't apply for the second DIN. It is a punishable offense as per section 159 of the Companies Act 2013.
The Independent directors are the members of the director's board, who do not have any monetary or economic relation to the company or linked person. They play a vital role in the company, as they help in the improvements of the standards and credibility of the company.

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