Appointment of Directors [Section 152]
Many people want to start their own company and be a director in it. Who knows one day you also start thinking the same? And when the time comes you should be aware of the process involved in appointing the directors in your company. So, the procedure you would be seeking is here. Refer: Legal Position of Directors
- Appointment of First Directors
There is no provision made in the articles of a company for the appointment of the first directors of the company.
In this case the Subscribers to the Memorandum (a person who is the first and the original shareholder of the company, whose details are mentioned as the subscriber to memorandum) are considered as first directors of the company.
In case of One Person Company, an individual being member shall be considered as the first director until the director or directors are duly appointed with reference to the provisions of this section.
- Appointment of Subsequent Directors
Under this section, every director shall be appointed by the company in general meeting.
At the general meeting, the shareholders (the owners) gather and take decisions. Generally, every director shall be appointed by the company in general meeting except where the Companies Act specifically provides some procedure for appointment of directors.
- Other requirements of Appointment
- Allotment of Directors Identification Number (DIN): A person is appointed as a director of the company only when he has been allotted DIN or any other number as may be prescribed.
What is DIN number? Refer article on DIN – Director Identification Number (DIN)
It is an 8-digit identification number. Every director is allotted with DIN that contains all the details of the director.
- Providing of DIN and furnishing of Declaration by the proposed Director: Every person appointed as Director by the company shall provide his DIN or such other number as may be prescribed. Further, he shall provide with a formal statement that he is not disqualified to become a director under the Companies Act.
- Written consent to act as Director: A person appointed as director shall not act as a director unless he gives his written consent to hold the office as a director. The consent shall be provided to the company in Form DIR-2.
The company shall file the consent of the director with the Registrar within 30 days of such appointment in Form DIR-12 along with prescribed fees.
EXCEPTION: This provision shall not apply in case of Government Company where appointment of director is done by the Central Government or State Government.
NOTE: This exception is applicable only if the company has not committed a default in filing its financial statements under Section 137 and Annual return Under section 92.
- Explanatory statement in case of appointment of Independent Director: In case of an independent director is appointed, an explanatory statement for such appointment shall be attached with the notice of general meeting including a statement of Board that he fulfills the conditions specified for such appointment.
Disclaimer: The above-mentioned cases are illustrative and not exhaustive. This article is only for discussing general issues and hereby we do not express any opinion or give any consultation in whatsoever manner understood. The cases may differ from assessee to assessee. We recommend you to take expert advice depending upon your particular case.