Appointment And Registration Of Director
The Backbone of Boardrooms – Appointment the Right Way.
Appointment and Registration of Director
Who is a Director?
A Director is an individual elected or appointed to the board of a company who acts as a representative of shareholders and oversees the company’s strategic direction and governance. Directors are responsible for ensuring compliance with legal obligations, financial oversight, and ethical conduct.
Types of Directors in a Company
Under the Companies Act, 2013, a company may appoint different types of directors, such as:
1. Executive Director – Involved in day-to-day operations.
2. Non-Executive Director – Not involved in daily operations but part of policymaking.
3. Independent Director – Unaffiliated with the company, required mainly in listed companies.
4. Nominee Director – Appointed by a financial institution or government.
5. Additional Director – Appointed by the Board, holds office until the next AGM.
6. Alternate Director – Acts in place of a director during their absence for more than 3 months.
7. Small Shareholders Director – Appointed to represent small shareholders (in listed companies).
Appointment of Director in a Private Limited Company
A Private Limited Company must have at least two directors. The appointment can be made:
• At the time of incorporation.
• By the shareholders in a general meeting.
• By the Board of Directors (for additional or casual vacancy appointments).
Eligibility for Appointment of Director
To be eligible for appointment as a director:
• Must be an individual (not a company or firm).
• Must be 18 years or older.
• Must obtain a Director Identification Number (DIN).
• Should not be disqualified under Section 164 of the Companies Act, 2013.
Documents Required for Appointment of Director
1. Identity Proof – PAN card (mandatory for Indian citizens).
2. Address Proof – Passport, Voter ID, Driving License, Utility bill.
3. Photograph – Recent passport-sized photo.
4. DIN – Director Identification Number.
5. Consent to Act as Director – Form DIR-2.
6. Resolution passed by the Board or shareholders.
🔹 Director Identification Number (DIN)
What is DIN?
A Director Identification Number (DIN) is a unique 8-digit number allotted by MCA to a person intending to become a director.
Procedure to obtain DIN:
• Apply through Form DIR-3 (for new appointments outside incorporation process)
• If at the time of incorporation: Apply through SPICe+ INC-32
🔹 Form DIR-2 – Consent to Act as Director
Form DIR-2 is a mandatory consent form where the individual gives written consent to act as a director.
• Must be signed by the appointee
• Includes personal details and declaration of non-disqualification
• Attached to DIR-12 when filing with ROC
🔹 Letter of Appointment
A formal letter issued to the new director by the company containing:
• Terms and duration of appointment
• Roles and responsibilities
• Remuneration, if any
• Termination clauses
• Confidentiality obligations
🔹 Filing of DIR-2 and DIR-12 with ROC
➤ Form DIR-12:
• To be filed within 30 days of appointment/resignation/removal.
• Attachments:
o Board/Shareholder Resolution
o Form DIR-2
o Letter of Appointment
• Filing Fee: Based on company’s authorized capital
🔹 Appointment of Additional Director (Section 161)
• Board can appoint if authorized by the Articles of Association.
• Valid until the next AGM or the last date when the AGM should have been held.
• Must file Form DIR-12.
🔹 Resignation of Director (Section 168)
Steps:
1. Director submits resignation letter.
2. Company acknowledges and files DIR-12.
3. (Optional) Director can file DIR-11 with ROC.
Attachments:
• Resignation letter
• Board Resolution accepting resignation
🔹 Removal of Director (Section 169)
A company can remove a director before the expiry of their term by:
1. Sending a special notice (14 days prior).
2. Passing an Ordinary Resolution in a general meeting.
3. Giving the director an opportunity to be heard.
Filing:
• File Form DIR-12 along with:
• Resolution
• Meeting notice with explanatory statement
📌 Compliance Timelines Overview
| Compliance | Time Limit |
|---|---|
| File DIR-12 after appointment/resignation/removal | Within 30 days |
| Obtain DIN via DIR-3 (if not at incorporation) | Before appointment |
| File DIR-11 (optional by resigning director) | Within 30 days of resignation |
FAQs
1. Is it mandatory for a director to be an Indian citizen?
No. A foreign national can also be appointed as a director, provided they have a valid DIN and meet the eligibility criteria.
2. What is the minimum and maximum number of directors in a private limited company?
• Minimum: 2 directors
• Maximum: 15 directors (can be increased by passing a special resolution)
3. What is DIN and how can it be obtained?
DIN (Director Identification Number) is a unique identification number allotted by the MCA to an individual who intends to be appointed as a director. It can be obtained by:
• Filing Form DIR-3 (for existing companies)
• Filing through SPICe+ INC-32 (for new companies)
4. What is Form DIR-2?
Form DIR-2 is the consent form signed by the individual being appointed as a director. It confirms the person’s willingness to act as a director and declares their eligibility under the Act.
5. What is Form DIR-12 and when should it be filed?
Form DIR-12 is filed with the Registrar of Companies (ROC) to notify the appointment, resignation, or removal of a director. It must be filed within 30 days from the date of the event.
6. Can a company appoint a director without their consent?
No. A written consent in Form DIR-2 is mandatory before appointing a person as a director.
7. What is the difference between an Additional Director and a Regular Director?
An Additional Director is appointed by the Board under Section 161(1) and holds office until the next AGM. A Regular Director is appointed by shareholders in a general meeting and serves for a fixed term.
8. Can a director resign at any time?
Yes. A director can resign by giving a written notice to the company. The company must then file DIR-12, and the director may also file DIR-11 with the ROC (optional after 2021).
9. How can a director be removed before their term ends?
A director can be removed by:
• Issuing a special notice,
• Giving the director a chance to be heard,
• Passing an ordinary resolution in a general meeting, and
• Filing DIR-12 with the ROC.
10. Can a person be a director in multiple companies?
Yes. However, an individual cannot be a director in more than 20 companies at the same time, out of which not more than 10 can be public companies.
11. What happens if the company fails to file DIR-12 on time?
The company may face penalties and late filing fees. The appointment or resignation may also be considered non-compliant until the form is filed.
12. Can a director be disqualified?
Yes. As per Section 164, a director can be disqualified for reasons such as:
• Conviction of a criminal offence,
• Being declared insolvent,
• Failure to file financial statements for three consecutive years, etc.
13. Is it mandatory to update the Articles of Association (AOA) for appointing a director?
Only if the existing AOA does not authorize the Board to appoint additional or alternate directors. In most cases, no amendment is needed unless there is a conflict.
14. Can a company reappoint a director who has resigned earlier?
Yes. A director who has previously resigned can be reappointed, provided they still meet the eligibility criteria and the shareholders or board approve the reappointment.
15. Can a company appoint a director retrospectively?
No. Appointment of directors must be done prospectively. ROC filings reflect the actual date of appointment and cannot be backdated.
16. What if a director refuses to sign Form DIR-11 for resignation?
Since DIR-11 is optional (as per 2021 amendment), it’s sufficient if the company files DIR-12 acknowledging the resignation with the Board Resolution and resignation letter.
17. Can a director appoint someone else to attend board meetings on their behalf?
No. A director cannot delegate this duty. However, a company may appoint an Alternate Director under Section 161(2) during long-term absence.
18. What is the difference between Executive and Non-Executive Director?
• Executive Director: Involved in daily operations and management.
• Non-Executive Director: Part of the board, advises and monitors but not involved in everyday business.
19. Does the resignation of a director require approval from shareholders?
No. Resignation does not require shareholder approval. However, the Board must record the resignation and file it with the ROC.
20. Can a director be disqualified for non-compliance in another company?
Yes. As per Section 164(2), if a person is a director in a company that has not filed financials or repaid deposits for 3 years, they are disqualified in all companies they are a director of.
