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Appointment of Director

Appointment and Qualification of a Director

The director has to be appointed based on qualifications provided under the Companies Act, 2013 read to know more!

Table of Contents


The appointment and qualification of a director is not just a substantial supervision provision but also a procedure regulation that must be met by every firm. Under the Companies Act, only one person may be elected as a director; a firm, institution, corporation, or other body with valid capability cannot be appointed as a director.

Requirement of Directors 

As per Section 149 (1) of the Companies Act, 2013 each company will have at least three directors in case of a public company, two directors in the case of a private company, and one Director in the case of a One-Person Company (OPC). A company may nominate upto fifteen directors, however, a firm may enroll more than 15 directors after a special resolution passed at a public company conference. According to Section 152(2) of the Companies Act, 2013 every director shall be elected at the general meeting of the firm, unless differently is not conveyed in this act. direct

Qualification of a Director

Terms of Appointment 

The following are the terms for the appointment of the Directors of Company

  • Only a real person may be appointed as a director
  • Someone may not be nominated as a director unless they have a director Identification number (DIN)
  • The person should have a Digital signature certificate (DSC) from the accrediting permission for authorisation as director
  • Every individual appointed for the post as a director must provide their DIN and statement that he or she is capable of appointment as a director under the Companies Act, 2013
  • Everyone will provide their approval to fulfill as a director on Form DIR-2 before or after his or her appointment
  • A person may not be capable of authorisation as a director, if he or she is not registered under subsection (1) of Section 164 of the Companies Act, 2013
  • One cannot hold directorship of more than twenty companies at one period including any other directorate role. In addition, the maximum number of public firms for which an individual may be elected as a director should not outperform ten.

Qualifications of Directors 

The Companies Act, 2013 has not yet initiated any educational or experienced capabilities of directors. Also, the Act does not attribute qualifications to directors. Therefore, unless a firm manuscript includes a requirement for that, the director does not have to be a shareholder unless he wants to be one on his own will. But articles usually support a minor percentage of eligibility. 

Share Qualification 

Company articles state that every director should have a specific number of percentages. Such shares are known as qualification shares. The director must buy the mandatory number of shares within two months of being nominated. If a director is not elected as a director they will not be required to collect desirable shares.

The qualified share price cannot be more than ₹5000 unless the nominal value of the name outperforms the share value. The director may only own shares and not sign any contracts. A director may suffer if he declines to achieve his qualified shares as notified. He can withstand it in two ways: 

  • The director post may become available
  • The director will be responsible to spend a penalty if he proceeds to work as a director
  • The director is expected to keep the shares himself.


Minimum qualifications for directors are set out in Section 274. If someone may not be elected a director in the following circumstances:

  • If the person is not mentally stable and is recognised by the court for the same
  • Whenever a director is determined as insolvent
  • Not paid for the qualification shares after 6 months of becoming a director
  • A director is sentenced for at least 6 months in prison due to misconduct and 5 years of not exceeding the date of expiry of a sentence
  • A director found guilty as a fraudulent person under Section 203
  • A person will not be authorised as a director if he cannot pay his debt which is not covered by his assets. Or in any case an issuer has filed a case against the director.

If a private company is not an assistant of a public firm it may proceed to be flexible with the disqualifications. In other terms, a public company and its deputies cannot be flexible with any other disqualifications.

Appointment of Directors at General Meeting 

In terms of Section 152 (2), every director shall be elected by the company at a public conference unless the Act gives otherwise. 

  • Appointment of directors if it is a private company – If it is a private company if the papers are not clear on the appointment of directors, or do not allocate for the appointment of Director other than a public conference, directors must be elected at the public conference by shareholders
  • Rotation Manner- Section 152 (6) (c) gives that the first-year general meeting of a public firm to be attached after the date of the general meeting at which the first directors are appointed and after that at all successive yearly meetings retire in rotation as responsible, If their number is not three or any multiple of three, a number near to one-third will be resigned from office 
  • The directors who resign at the general meetings being conducted at duration annually must be those who have been in the department for a long term from the last authorization, but among the someone who fulfills directors on the same day, those who are to retire must, if they decline and accountable to any agreement between them, are deduced by  [Section 152 (6) (d)]]:


A strong five-year agreement fulfills an outstanding way to authorise someone with the crucial capabilities to direct the company. However, the requirement of interest due to privacy is given under the law and a remedy period of 30 days is accessible for the director to improve any filing mistakes. The company should make sure to analyse and assess the director before appointing them. You can reach out to our  experts at Vakilsearch in case of any queries.

Frequently Asked Questions

What is the role of a director in a company, and why is the appointment and qualification process important?

Directors play a pivotal role in a company, guiding strategic decisions and ensuring corporate governance. The appointment and qualification process is crucial to assess a director's skills, expertise, and alignment with the company's goals, safeguarding effective leadership and decision-making.

How is the appointment of a director typically initiated, and who has the authority to make such appointments within a company?

Director appointments are typically initiated through board resolutions. The authority to make appointments lies with the board of directors, often subject to approval from shareholders in certain circumstances.

Is there a maximum or minimum age limit for individuals to serve as directors, and are there any industry-specific qualifications required?

There is usually no maximum age limit for directors, but minimum age requirements may vary. Industry-specific qualifications are often not mandated, emphasising skills, experience, and suitability for the role

What is the tenure or term of office for a director, and can it be extended or renewed?

The tenure of a director's term varies and is defined in the company's bylaws. In many cases, terms can be extended or renewed based on performance, contributions, and board decisions.

Can a person be appointed as a director in multiple companies simultaneously, and are there any restrictions on the number of directorships one can hold?

Yes, individuals can be appointed as directors in multiple companies simultaneously. However, regulatory bodies may impose restrictions on the number of directorships one can hold, ensuring effective governance and commitment.

Are there legal or regulatory requirements for the appointment of independent directors, and how are they different from other directors?

Independent directors must meet legal and regulatory requirements that distinguish them from other directors. They bring objectivity and unbiased judgement, ensuring a balance of power and accountability within the board.

How does the resignation or removal of a director from office affect the appointment process, and what steps should be taken to update records?

The resignation or removal of a director triggers the need to update company records. Appropriate steps include notifying regulatory bodies, amending official documents, and ensuring a smooth transition in board composition.

Can a director be appointed without the consent of the individual, and what legal implications does this have?

Directors are typically appointed with their consent. Appointing a director without consent can have legal implications, potentially leading to disputes and challenges. Consent ensures willingness and commitment to the responsibilities of the role.

What qualifications and experiences are considered valuable for specific types of directors, such as executive directors, non-executive directors, or nominee directors?

Executive, non-executive, and nominee directors bring varied skills. Executive directors often need industry-specific expertise, while non-executive directors contribute independent perspectives. Nominee directors represent the interests of specific stakeholders, each requiring distinct qualifications and experiences.

What legal obligations do companies have to fulfil regarding the qualification and appointment of directors, and how are these monitored or enforced by regulatory bodies?

Companies are legally obligated to fulfil specific criteria for director appointments, ensuring competence and adherence to corporate governance principles. Regulatory bodies monitor and enforce these obligations, promoting transparency and accountability in corporate leadership.

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