A director is an individual who directs, controls, or manages the affairs of the company. Every company shall have a Board of Directors consisting of individuals as directors. Generally, the Appointment of the director is done by shareholders in general meeting.
Directors are now formally included within the definition of “Key Managerial Personnel” or “KMP” under Section 2(51) of the New Act.
- Minimum 2 directors in case of Private Limited Company.
- Minimum 3 directors in case of Public Limited Company.
- In case of One Person Company minimum one director.
- A company can appoint maximum 15 directors but if more than 15 directors are appointed special resolution should be passed in General Meeting and approval of Central Government is not required.
What documents are required for Appointment of a Director?
- Obtain DSC.
- A person must have Director Identification Number(DIN) which can be obtained by filing DIR-3C on MCA.
- DOCUMENT PREPARATION:
- A letter stating his consent as director and disclosure of interest in other companies
- A declaration that he is not disqualified to become director
- Notice to call a meeting with an explanatory statement
- Resolution to be passed at a meeting for appointment of a director
- Appointment letter is to be issued by the company to the director
- FILING OF FORM DIR-12:
- File DIR-12 along with documents such as consent/approval letter
- Written consent of director for his appointment in DIR-2
- The interest of director if any in other entity in Form MBP-1
- Notice with a certified copy of a resolution of meeting to be filed within 30 days
A person can hold maximum 20 number of directorships including any alternate directorship. Number of directorships in public companies/private companies that are either holding/subsidiary company of public company shall be limited to 10.
What are the different types of directors in a company?
- MANAGING DIRECTOR:
The managing director is an individual who is entrusted with substantial powers of managing the affairs of the company as per the Memorandum or Articles of Association or by resolution passed in General Meeting or by its Board of Directors. - EXECUTIVE DIRECTOR:
An executive director is responsible for day to day operations and management of the company. He is in full-time employment of the company. - ORDINARY DIRECTOR:
Ordinary director means a “simple director who attends board meetings of the company and participates in matters put before the Board of Directors”.These directors are neither Whole time directors or Managing directors. - ADDITIONAL DIRECTOR:
Additional directors are appointed by Board of Directors between two annual general meetings according to provisions of Articles of Association. They can hold office only up to the next annual general meeting of the company. - ALTERNATE DIRECTOR:
Alternate director is appointed by board of directors in general meeting to act as director during the absence of original director for not less than three months.They are appointed for a person who is Non-Resident Indian or Foreign Collaborators of company.
FAQs
In public company or private company subsidiary of public company two-thirds of total number of directors are appointed by shareholders and remaining one-third is appointed according to manner described in Articles.
In private company which is not subsidiary of public company the manner of appointment of any or all directors is as per the Articles.in case the Articles are silent the directors are appointed by shareholders.
The directors of the company are appointed by shareholders in general meeting. The Board of the company if authorised by AoA can appoint a director under the following:
1. Appointment of additional director
2. Appointment of nominee director
3. Appointment of alternate director
4. Appointment of director for filling a casual vacancy
If authorized by Articles of Association, Board can appoint any person as Additional Director other than a person who fails to get appointed as Director in a general meeting. Additional Director can be appointed by passing a resolution in Board meeting or by circulation.