Adding New Director

 

Overview:

It is possible to add or remove a director from the company at any time. While the articles of incorporation should have provisions allowing it, the Articles of Association and Companies Act provisions dictate how and who can be appointed as a new director.

The appointment of Directors is the most important process as it plays a vital role in the growth and development and management of the Company. Appointing new Directors are done from time to time depending on the requirements of the shareholders of the company.

To appoint an individual as a director of the company, that particular individual should proposes a director identification number (DIN) and digital signature certificate (DSC). it is easy to obtain a DIN number as any individual who is above the age of 18 can apply for this number. The residency status or the nationality of the applicant does not matter to apply DIN. The time period to file for the appointment of the director takes about 10 – 15 working days.

 

Before going to the procedure of adding a director to your company, let’s have a look at the

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Types of Directors in a Company.

 

MANAGING DIRECTOR

Managing Director of a company is a Director, who by moral excellence of Articles of Association of a company or a resolution passed in its general meeting, or an agreement with the company or by its Board of Directors, is confided with substantial powers of managing the business affairs of the company.

 

EXECUTIVE DIRECTOR

Executive Director of a company is a Director, who is in regular employment of the company. and are profoundly involved with the growth and the management of the company and managing the business operations of the company.

 

ORDINARY DIRECTOR

Ordinary Director of a company is a simple Director who participate in all Board Meetings of a company and discuss the matters that are put before the Board of Directors. These Directors can be full-time Directors or can also be as a Managing Directors of the company.

 

ADDITIONAL DIRECTOR

Additional Director of a company means a person appointed by the Board of Directors once in annual general meetings which is subject to the provisions of the Articles of Association of a company. These additional Directors can take the responsibilities of the office only up to the next annual general meeting of the Company.

 

ALTERNATE DIRECTOR

Alternate Director is an eligible individual who is appointed by the Board of Directors in a general meeting to perform as a Director in the absence of original director for a certain period of about three or more months. Generally, alternate Director will be a Non-Resident Indian or Foreign Collaborators of a company.

 

Why Add/Change Directors

 

The following are the common reasons why people choose to add or change directors in a company:

To get new talent on board

As your company grows and evolves, you will need to bring new talent on board to meet the new requirements and challenges. It is natural to want to add or make changes in the top-level management.

No dilution of ownership

Directors are primarily responsible for the day-to-day operations of a company. Adding or appointing an additional director helps the shareholders assign more operational responsibilities without losing any strategic control.

Inefficiency of existing directors

It could be that the existing directors cannot meet the requirements of the work or maybe even due to retirement, family problems, physical ailments or other personal reasons. In such cases, you need to add new directors.

To meet the statutory limit

Every type of company needs a certain number of directors. In case of sudden death or plans of retirement from existing directors, you will have to add another director to your company.

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Process of Adding a Director

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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 Form DIR-2.

Step 3: The company must pass a board resolution for appointing a particular person as a director of the company.

Step 4: Get DSC (digital signature certificate) 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.

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Documents required

 

• Passport size photograph

• Self-attestedPAN card copy

• Copy of resolution

• Form DIR- 12, Form- DIR-2, Form DIR-8 to ROC/MCA

• Form MBP-1, MGT- 14

• Digital signature certificate (DSC) and Director identification number (DIN) of the new director.

• Residence proof of director

a) passport

b) voter id

c) adhar card

d) driving licence (any of the four)

 

DISCLAIMER- These materials are public information and have been prepared solely for educational purposes. These materials reflect only the personal views of the author and are not individual legal advice.

It is understood that each case is fact specific and that the appropriate solution in any case will vary. Finally, the owner will not be accountable for any loses injuries or damages from the exposures or usage of this information

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