Being a director holds a lot of responsibilities. It is one of the most important designations in a company. But can one person be a director for two companies at the same time? Read this article to get the answer.
A whole-time director is a director who works full-time for the firm, commits all of his time and attention to the matters at hand, and has a significant financial stake in the business. The senior management team of companies and other large organisations are referred to as directors. A candidate for a Whole-time director position must already be a director of the company in order to be selected. Therefore, holding the position of director is a need for holding the position of a whole-time director. To know more , visit Vakilsearch the all in one solution for legal needs.
Appointment of Whole Time Director in Two Companies
- The provisions of Section 196, read with Schedule V, must be followed in order to recruit a whole-time director. Since the services are full-time, it stands to reason that a director cannot hold whole-time employment in more than one organisation. The Act does not, however, prevent someone who is currently a whole-time director of one firm from being nominated as a director of another. The whole-time director may be appointed as a whole-time director in a subsidiary company in accordance with sub-section (3) of section 203 when he is a key managerial person as defined by that section.
- The Whole Time Director and Manager positions cannot be filled concurrently by the same organisation.
- The company may re-appoint the managing director, whole-time director, and manager for additional terms of up to five years, but not earlier than one year prior to the end of their current terms. This indicates that during the final year of their current term, a corporation may re-appoint them for the next one.
- The minimum age and retirement age for these jobs, respectively, are twenty-one and seventy years old, respectively, at the time of appointment. Therefore, a person under the age of twenty-one may be hired as managerial personnel.
Number of Directorships of Director
A person may occupy the office of director simultaneously in 20 businesses, according to Section 165(1) of the Act. The position of alternate directorship is included in the list of 20 corporations. An individual is only allowed to serve as a director for 20 firms at once. However, a person is only permitted to serve as a director of up to 10 public corporations at once. A person may not serve as a director of more than ten publicly traded businesses at once.
The directorship in private companies that are a public company’s holding or subsidiary is taken into account when determining the total number of public firms. However, while determining the maximum number of directorships at 20 firms, the directorship in a dormant company is not counted.
Documents Required for Appointment of Director
- Identification proof (passport)
- PAN card
- Residence documentation (electricity bill, rental agreement, Aadhar Card, voter ID, passport, driving licence)
- Passport-size photo
- Digital signature certification for the prospective director
- PAN card for Indian applicants, and
- Passports for international applicants are all requirements.
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The Process of Appointing a Whole-Time Director
- If the candidate hasn’t previously been nominated as a director, first name them as Additional Directors of the Company.
- Prepare the agenda for the board meeting along with draft resolutions that will be voted on at the meeting.
- Call for a board meeting and approve the next board resolution.
- Within 30 minutes of the meeting’s conclusion, the board meeting’s decision is sent to the stock exchange, where the company’s stocks are listed.
- Send the applicant a letter of appointment.
- Submit an e-Form DIR-12 with attachments to the Registrar of Companies within 30 days of the appointment of a full-time director.
- Within thirty (30) days of the resolution’s passage, file the board resolution for the appointment of a whole-time director, along with any necessary attachments, with the Registrar of Companies.
- Completion of the E-form MR-1 in 60 days.
- Prepare the notice for the Annual General Meeting or Extraordinary General Meeting to seek member approval for the appointment of a full-time Director, depending on whatever occurs first after their appointment.
- Calling a meeting and adopting a regular resolution for the appointment of a full-time.
- Sending an appointment letter to a full-time director and recording the event in the company’s register, minutes, etc.
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Disqualification of Director
- When a business does not reimburse a deposit, it has received or paid interest on deposits.
- If the organisation misses the deadline for redeeming the debentures or paying the appropriate interest.
- The company’s directors may be disqualified if they fail to pay the stated dividend and do so for more than a year.
- if the director has submitted a petition for insolvency resolution.
- If a judge has previously declared the director ineligible.
- If a corporation’s board of directors conceals their individual or joint ownership interests.
- If a judge has sentenced the director to more than six months in prison after finding them guilty of a crime.
- If a judge rules that the director suffers from a mental illness.
- If the directors of the company is judged responsible for party transactions within the previous five years for a violation of Section 188 of the Criminal Code.
- It is possible for the court to disqualify directors who are still insolvent.
Conclusion
The number of directorships must be specified in order for the individual nominated to serve as a director to devote a sufficient amount of time to the organisation. The Companies Act 2013 forbids a person from holding the position of a director in order to give his firms that he serves as a director quality time and perform his duties as a director effectively. Our experts at Vakilsearch are ready to provide you with customised solutions for all your legal needs right from obtaining a DIN for the new directors of the Company, writing the resolution, to submitting Form DIR-12!
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