Procedures for the Appointment of Directors in a Private Limited Company

Appointment of directors

As a legal entity, the company requires a natural person to manage, direct, control, and oversee its affairs. A minimum of two directors are required for a Private Limited Company. One or more directors can be appointed or elected by the boards of directors of a private limited company to implement and determine company policies. The purpose of this article is to describe how a director is appointed to a private limited company.

What is the eligibility for appointment as a director in a Private Limited Company?

  • According to the Articles of Association (AOA), directors must be eligible to serve.
  • The proposed individual must be at least 18 years old, a major.
  • It is mandatory that he or she be qualified according to the laws and provisions outlined in the Companies Act, 2013. therein.
  • In order to be appointed as a director, the proposed individual must receive the consent of the Board members.
  • A Director does not need to have any educational qualifications to be eligible for a position under the Companies Act 2013.
  • Indian Nationals, Non-Resident Indians (NRIs), and Foreign Nationals are eligible to serve as directors in India.

Documents Required for Appointing a Director in a Private Limited Company

  • Self-attested copy of PAN
  • Self-attested copy of identity and address proof (passport, Aadhar card or Election card)
  • Consent to act as director in form DIR-2
  • Copy of resolution passed by the shareholders
  • Notice for shareholders meeting
  • PAN card: Mandatory for an Indian Applicant
  • Passport: Mandatory for a foreign Applicant

The appointment process for the director of a company 

Consent of the Director in Form DIR 2

As part of the process of appointing a Director, the proposed Director must consent to the appointment. The proposed director must submit all necessary documents with his consent to be a director in Form DIR 2.

Obtain DSC and DIN of proposed Director

Following that would be the production of the proposed Director’s Digital Signature Certificate (DSC) and DIN. The DSC shall be obtained from the Indian certifying authorities if he does not have it.

 Whenever the Director does not have the Director Identification Number, the first thing the Director needs to do is inform the company of this fact. It is required that the company pass a resolution approving the same and submit form DIR 3 to the DIN of the proposed Director. Documents proving KYC should be submitted with DIR 3 KYC. DINs are only granted once for the lifetime of a director.

Call for an EGM and Board Meeting

Directors are appointed at a general meeting of the company. A notice to all shareholders is to be sent to inform them that the company will hold an extra ordinary general meeting.

After the notice of EGM has been issued to all shareholders, the next step shall be to hold the EGM at the time and place decided and pass all the necessary resolutions for the appointment of directors.

Appointment letter to be issued

It would be the director’s task to receive a letter of appointment after the resolution has been passed. There must be mention of salary and terms and conditions included in the appointment letter for the Director.

File Form DIR-12 to ROC

Within 30 days of the date of appointment of the Director, the company should file Form DIR 12 with all the necessary documents with the Registrar of Companies.

Conclusion 

The company is required to make necessary changes in the Register of Directors and key managerial personnel after all the steps for the appointment of Directors are completed. Furthermore, it is necessary to update the Contracts Register and the Agreement Register in which Directors may be interested in Form MBP-4.

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