A director is a person elected by the company's shareholders to oversee the company's operations according to the rules set out in the Memorandum of Association (MOA) and Articles of Association (AOA). Anyone who wants to be a director must have a Digital Signature Certificate (DSC) and a Director Identification Number (DIN).
To become a director, you need to be at least 21 years old. The AOA of the company should include guidelines for appointing a new director. The Companies Act of 2013 specifies the procedure a company must follow when adding a new director. In a private company, there must always be a minimum of two directors. But they can have a maximum of fifteen directors.
In a Private Limited Company, the Directors have a vital role in how the company operates. They are responsible for running the business and making daily decisions. Shareholders trust the Directors with their money, so the Directors are essential people in the company that investors rely on.
The benefits of adding a new director are as follows:
Independent directors should not have been associated with the company as an employee, proprietor, or partner in the three preceding financial years before their appointment.
Remuneration to directors can be treated as 'Salaries' or 'fees for professional or technical services' and is subject to TDS under relevant sections of the Income Tax Act.
Required Documents to Appoint a Director:
Step 1: The proposed director needs to obtain a Digital Signature Certificate (DSC) if they don't have one.
Step 2: If the proposed director doesn't have an active Director Identification Number (DIN), they should obtain one using Form DIR-3.
Step 3: The company should hold a general meeting to pass a resolution for appointing the new director.
Step 4: The proposed director should provide their consent for appointment by submitting Form DIR-2. Once the company receives this form, the person is officially appointed as a director.
Step 5: Following the director's appointment, the company should issue an appointment letter to the new director.
Step 6: The company must file the necessary forms with the Registrar of Companies (ROC) within 30 days of the appointment.
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Who can be a Company Director?
Any individual over 21 years can be a director. Artificial entities like corporations cannot be directors.
What is the eligibility criteria for Company Directors?
Directors must be over 21 years old, sound of mind, not bankrupt, not convicted for over six months.
Is shareholding required for Company Directors?
No, a director doesn't need to hold company shares unless the Articles of Association specify otherwise.
What is the procedure for Director Removal?
Removal involves passing a resolution in a general meeting, filing Form DIR-12 with the ROC, and the director's name being removed from the MCA website.
What Forms are required for adding a new Director?
To add a new director, the company must file MGT-14 (resolution), DIR-2 (consent), and DIR-12 (particulars of appointment) forms with the ROC.
Proprietorship Registration