A director is a person appointed to direct and manage the affairs of a company. Directors are responsible for managing the company's affairs, making decisions, and ensuring compliance with laws and regulations and also can be held liable for any losses or damages caused to the company or its stakeholders due to their negligence or misconduct.
Types of Directors:
- Executive Directors
- Non-Executive Directors
- Independent Directors
- Nominee Directors
- Alternate Directors
Eligibility:
A person must be at least 18 years old, have a Director Identification Number (DIN), and not be disqualified under the Companies Act, 2013.
Process for appointing a Director:
Step 1: Board Resolution
The company's board of directors passes a resolution to appoint a new director.
Step 2: Shareholder Approval
The appointment of a director requires shareholder approval. The company must convene a general meeting to obtain shareholder approval.
Step 3: Director's Consent
The proposed director must provide their consent to act as a director of the company.
Step 4: Director Identification Number (DIN)
The proposed director must obtain a DIN from the Ministry of Corporate Affairs (MCA).
Step 5: Filing with the Registrar of Companies (ROC)
The company must file Form DIR-12 with the ROC within 30 days of the appointment.
Requirements for appointing a director:
The following are required for the appointment of a director:
- Board resolution
- Shareholder resolution
- Director's consent
- DIN
- Identity proof and address proof of the director
Condition of Cessation of Directors
- Resignation: A director may resign from their position by giving a notice in writing to the company.
- Removal: A director may be removed from their position by the shareholders of the company through a resolution passed at a general meeting.
- Disqualification: A director may be disqualified from holding the position of a director if they are convicted of certain offenses, become insolvent, or are declared to be of unsound mind.
- Death: A director's position becomes vacant if they die.
- Retirement: A director appointed for a fixed term must retire at the end of their term.
Filing Requirements
The company must file the following forms with the Registrar of Companies (ROC) within the specified timeframe:
- Form DIR-11: Notice of resignation of a director
- Form DIR-12: Particulars of appointment and cessation of directors and the key managerial personnel
Frequently Asked Question:
Q1: Who can appoint a director?
A1: The shareholders of the company can appoint a director through a resolution passed at a general meeting.
Q2: What is the procedure for appointing a director?
A2: The procedure for appointing a director involves passing a resolution at a general meeting, obtaining the director's consent, and filing Form DIR-12 with the ROC.
Q3: Can a director be appointed for a fixed term?
A3: Yes, a director can be appointed for a fixed term, but the term cannot exceed five years.
Q4: Who is eligible to be appointed as a director?
A4: A person who is at least 18 years old, has a DIN, and is not disqualified under the Companies Act, 2013, is eligible to be appointed as a director.
Q5: What forms need to be filed with the ROC for the appointment of a director?
A5: Form DIR-12 need to be filed with the ROC for the appointment of a director.
Q6: What is the timeframe for filing forms with the ROC?
A6: The forms must be filed with the ROC within 30 days of the appointment of the director.
Q7: Is a DIN required for the appointment of a director?
A7: Yes, a DIN is required for the appointment of a director.
Q8: What is the process for obtaining a DIN?
A8: The process for obtaining a DIN involves filing Form DIR-3 with the ROC, submitting necessary documents and paying the required fees.
Q9: How many directors must retire by rotation at every AGM?
A9: One-third of the total number of directors, other than independent directors, must retire by rotation at every Annual General Meeting.
Q10: Can a retiring director be re-appointed?
A10: Yes, a retiring director can be re-appointed at the Annual General Meeting.
Q11: Can a director resign from their position?
A11: Yes, a director can resign from their position by giving a notice in writing to the company.
Q12: Can a director be removed from their position?
A12: Yes, a director can be removed from their position by the shareholders of the company through a resolution passed at a general meeting.
Q13: What forms need to be filed with the ROC for director cessation?
A13:Form DIR-11 and Form DIR-12 need to be filed with the ROC for director cessation.