Add Director
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Adding New Directors to a Company:
A Director in a company is responsible for managing the company’s affairs as per the MOA and AOA. When a company needs to add a new director, it has to follow certain legal procedures. This article discusses the steps a Private Limited Company in India needs to take to legally appoint a new director.
Step 1: Obtain consent from the proposed directors Before proposing a new director to the Company, it is necessary to obtain their consent. The company must obtain Form DIR-2 from the proposed director.
Step 2: Obtain Digital Signature Certificates If the proposed directors do not have Digital Signatures, they need to obtain one.
Step 3: Obtain Director Identification Number (DIN) If the proposed director does not have a DIN, the company should apply for one. The DIN is valid for a lifetime and can be obtained by anyone above 18 years of age, regardless of nationality.
Step 4: Obtain KYC and necessary educational qualifications documents The company must obtain all necessary KYC and educational qualification documents as per the conditions of the job. It is important to note that there is no minimum educational qualification required to hold the post of Director in a Private Limited Company in India.
Overview of a Director in a Private Limited Company
In a private limited company, a Director is an individual elected by the shareholders to manage the affairs of the company in accordance with its Memorandum of Association (MOA) and Articles of Association (AOA). Since a company is an artificial person, it can only act through the agency of a natural person, which is why a Director has to be a living person. The management of the company is entrusted to its Board of Directors, and the appointment of Directors may be required from time to time based on the requirements of the shareholders of the business. Directors play a crucial role in the functioning of a Private Limited Company, as they are responsible for the conduct of the business and making day-to-day decisions.
Types of Director in Company
| Type of Director | Definition |
|---|---|
| Executive Director | A director who is also an employee of the company and has a full-time role in its management. |
| Non-Executive Director | A director who does not have a full-time role in the management of the company but may provide advice and guidance to the executive directors. |
| Independent Director | A non-executive director who does not have any material or pecuniary relationship with the company or its promoters, and is expected to provide unbiased advice and guidance to the board. |
| Nominee Director | A director who is appointed by a shareholder or a creditor of the company to represent their interests on the board. |
| Women Director | As per the Companies Act, 2013, certain companies are required to have at least one woman director on their board. |
In a Private Limited Company, the Companies Act, 2013 specifies the maximum and minimum number of directors that can be appointed. According to the law, a Private Limited Company must have a minimum of 2 directors and can have a maximum of 15 directors.
The maximum number of directors in a Private Limited Company can be increased beyond 15 by passing a special resolution at a general meeting of the shareholders. However, before passing such a resolution, the company must comply with certain requirements like increasing the paid-up capital and appointing an independent director, among others.
It is important to note that the number of directors in a company should be in line with the requirements of the company’s operations and should not be just for the sake of compliance. Additionally, it is important to ensure that the directors appointed are capable and have the necessary skills and experience to manage the affairs of the company effectively.
Add Director FAQ’s:
Who is eligible to be appointed as a Director in a Company? As per the Companies Act, 2013, only an individual or a living person can be appointed as a Director in a company. An entity or a body corporate cannot be appointed as a director of a company.
What is the maximum number of Directors a Company can have? A company can have a maximum of fifteen directors. If the company wants to increase the number of directors, it can be further done by passing a special resolution.
What are the eligibility criteria to become a Director in a company? The proposed individual must be a major and should qualify under the law mentioned in the Companies Act, 2013. The members of the board should agree to the appointment of the new director.
Which form is required to be filed for appointing a new Director? For appointing a new director, the company is required to file e-Form DIR-12 with the Registrar of Companies (ROC) along with the necessary documents and fees.
Is it necessary to have a shareholder as a Director of the Company? No, there is no such requirement that the director needs to be amongst the shareholders. A person who has no shares can also be appointed as a Director in the Company.
Is it necessary to be physically present to change the registered office of the Company? No, there is no such requirement. The change in the registered office can be done online.
Related Business Registrations
In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.
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