A director is an individual who is appointed to perform functions and take up the responsibilities of managing a company. Check out this blog to learn appointment of a director in a private company.
A director is an individual who is appointed to perform functions and take up responsibilities of managing a company as per the provisions of the Companies Act, 2013. The Directors are collectively termed as the Board of Directors. These individuals contribute to the policy-making and running of a company. Process For Appointment of a Director In Private Company
Types of Directors in a Company
There are different types of directors in a company. Some of them are:
- Residential Director
- Independent Director
- Small Shareholders Directors
- Women Director
- Additional Director
- Alternate Director
- Nominee Directors
- Executive Director
- Non-executive Director
- Managing Director
Appointment of a Director
In a public company, the shareholders appoint two-thirds of its directors. The remaining one-third is appointed as per the guidelines mentioned in the articles of association for company director details Online. In the case of a private company, the method of appointment of the directors is contained in the Articles of Association. If the appointment method is not stated in the articles, the shareholders have transferred the right to appoint the directors. Section 163 of the Companies Act: https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf also permits – two-thirds of the directors can be appointed as per the principle of proportional representation provided if the company has adopted such policy. Nominee directors are appointed by the Government or third-party authorities to deal with misconduct and mismanagement.
Appointment of Managing Directors
The tenure of a Managing Director is for a maximum period of 5 years. A Managing Director of a company can be appointed as an MD of another company if the Board of the first company is aware of this development and approves of it.
Conditions for Appointing Directors
The 2 things you must know about the process for appointment of a director are:
- The individual should be between 25 to 70 years of age
- The candidate should not have been imprisoned or fined under any statutes
The other conditions to be fulfilled are:
- They should not have been detained or convicted under the Conservation of Foreign Exchange and Prevention of Smuggling Act, of 1974
- In case the company approves the appointment of a director by a special resolution passed in the general meeting or obtains the approval of the central government, then the upper age limit of 70 years will not be applicable
- They should be appointed to a managerial post in other companies and should be receiving remuneration from the same
- He/ she should be a resident of India
- The word resident also includes a person staying in India for a period of a minimum of 12 months preceding the date of appointment.
Qualifications of Directors
According to the Companies Act, 2013, an individual to be appointed as a director online does not require any educational qualification or work experience. Hence, unless the articles of the company include any requirement for appointment to the post of director, the candidate does not have to fulfill any conditions. Also, he does not have to be a shareholder unless he desires to do so.
You can also learn more about the Removal of the Director online from our Experts.
Appointment by Board of Directors
The Board of Directors can exercise the power to appoint directors in the following cases.
- Additional Directors
- Alternate Directors
- Filling up the Casual Vacancy
- Nominee Directors
How to Appoint a Director to a Company?
In a Private Limited Company, the Directors play an important role. They direct and supervise the day-to-day work of the company. They take care of the management and safeguard the interests of the shareholders. Below given is the process of appointing a director of a company:
Step I – Obtain the consent of the proposed directors
The consent of the would-be director is the initial and the most important step. The company must obtain Form- DIR- 2 before proposing the name of the new director.
Step II – Digital Signature Certificates of the Proposed Directors
If the proposed directors do not have their digital signatures, they should apply for it immediately. It must be ascertained that the would-be directors of the company possess a digital signature.
Step III – Get the Director’s Identification Number (DIN)
If the proposed directors do not have a director identification number, then the companies must apply for the DIN for the director. This must be attached to the form DIR- 3. The DIN allotted can be used for a lifetime. Any adult can apply for and obtain a DIN.
Since there is no restriction regarding Nationality, Indian Nationals, Non-resident Indians, and even foreign nationals can obtain the DIN.
Step IV – Obtain KYC Documents
The company should also collect the KYC and the educational qualification documents required for the appointment of a director.
Note: There is no minimum educational qualification required to be a director of a company in India.
Maximum and Minimum Number of Directors in Pvt. Ltd. Company
A private limited company can appoint a maximum of 15 directors. If the need arises to further increase the number, a special resolution has to be passed before proceeding to do so.
How Many Minimum Directors Can Different Companies Have
- A Private Ltd. Co. has to appoint a minimum of two directors
- Limited Company needs a minimum of three directors
- A one-person company requires only one director
Residency Requirement of a Private Ltd. Company Director
The Companies Act 2013 does not prohibit the appointment of a foreigner or an NRI as a director of any company. Section 149 (3) of the Companies Act provides that at least one director of the company should have been living in India for 182 days in the preceding year.
Women Director in Company
Listed companies and limited companies with a paid-up share capital of 100 crores or more or a turnover of 300 crores must appoint at least one woman director on their board of directors.
Conclusion
We hope this article has helped provide information on the things you must Know about the appointment of a director. An individual to be a director does not require any fixed qualifications unless the Article of Association mentions otherwise. The directors of a company are responsible for its performance and goodwill in the market. An efficient director can help the company expand and reach greater heights. for information contact Vakilsearch
