Mandatory Annual Filings
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Adding a director to a company can be a complex process. However, it is important to follow the correct steps to ensure the appointment is valid and compliant with the law. The procedure for appointing a director will vary depending on the type of company and the jurisdiction in which it is incorporated. However, some general steps are common to most appointments.
Introducing new leader and talent: – By adding a new Director in the company one opens the door for new knowledge, fresh eyes and the skills they bring with them.
Mandatory number of Directors: – The Companies Act has stated the minimum number of Directors in various types of companies. Like for private company the number of Directors shall not reduce below 2 and for public company the limit is 3. If that happens, then the company has to appoint a new director(s) within 6 months.
Making sure that the work is unaffected: – At certain point of time the existing Directors are not able to serve the company due to retirement or other personal reasons. It may be resignation of a Director or his/her death but the company needs to make sure that its work doesn’t suffer, because of that.
Sharing operational responsibility not ownership: – The New Director does not need subscribing to the share capital, rather he/she is responsible for the day to day operations in the company. The shareholders can keep their voting rights and strategic control to themselves, the ownership does not saturate with the entry of new director in the company.
The process of adding a director is more complicated than one might think it to be.
Step 1: Check if the articles (AOA) of the company supports adding an additional director. If there are no such provisions in the AoA of the company, then modify the AoA of the company in a way that allows adding an additional company director.
Step 2: The proposed director must give his or her consent to act as the director via director appointment form
Step 3: Step 3: The company must pass a board resolution for appointment of directors in company law
Step 4: Get DSC (Digital Signature Registration) and DIN (director identification number) for the new director.
Step 5: Collect the basic documents and information required for the process and get Form DIR-2, Form DIR-12 and Form DIR-8 at ROC done.
This is a simplified version of the process. Khata Dekho will take care of mostly everything in these steps for you. After this basic process is over, there are a few more formalities that need to be completed after this process and our team will explain those to you.
There are different types of directors in company, each with specific roles and responsibilities. The most common types of directors are:
Executive directors are involved in the day-to-day management of the company. They may have specific titles, such as CEO, CFO, or COO.
Non-executive directors are not involved in the day-to-day management of the company. They provide independent oversight of the company’s board of directors and management.
Independent directors are non-executive directors with no financial or other interest in the company other than their directorship. They are responsible for protecting the interests of the company’s shareholders.
The person to be appointed as the new director gives consent to their appointment in the form of a written document, as per the form DIR-2.
A director should obtain a digital signature while adding himself as director. In the case, he is not having DSC he have to apply for a new one and if he has he doesn’t need to get a new one.
A director should obtain a DIN (Directors Identification Number) while adding himself as director. In the case, he is not having DIN he has to apply for a new one and if he has he doesn’t need to get a new one.
A board meeting has to be arranged to pass a resolution to appoint the new Director. Once the resolution is passed the director is appointed.
As soon as the director is appointed the company has to issue the Letter of Appointment to the director.
Once the Letter of Appointment is issued to the Director, the ROC must be informed about this appointment within 30 days.
A director is a member of the board of directors of a company. The board of directors is responsible for the overall management and governance of the company. Directors have a fiduciary duty to act in the best interests of the company and its shareholders.
There are many reasons why a company might appoint an additional director. Some common reasons include:
The resolution required for the appointment of a director is a Resolution for the Appointment of a Director. This resolution should include the following information
Yes, there is and it is as follows:
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