Form DIR 2 – Consent by a person to act as Director of a company

The Form DIR 2 acts as consent of the person that he/she is ready to act as the Director of a company.

Form DIR 2 – Consent by a person to act as Director of a company

 

Form DIR – 2 is prescribed under the Companies’ Act, 2013 and is required to be obtained by the company where it is going to appoint any person as director. The Form DIR 2 acts as consent of the person that he/she is ready to act as the Director of a company.

The form DIR 2 asks a person to give following declarations and particulars:

 

Declarations:

  • that the person is not disqualified to become a director under the Companies Act, 2013.
  • A person has to declare the following:

 

“I declare that I have not been convicted of any offence in connection with the promotion, formation or management of any company or LLP and have not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law in the last five years. I further declare that if appointed my total Directorship in all the companies shall not exceed the prescribed number of companies in which a person can be appointed as a Director.”

 

Particulars as required by Form DIR 2

S. No. Particulars Details Remarks for Understanding
1.                Director Identification Number (DIN):   In this the person who is going to be appointed should mention his/her DIN
2.                Name (in full):   Full Name of the person as mentioned in PAN Card
3.                Father’s Name (in full):   Father’s Name as mentioned in PAN Card
4.                Address:   Address of the person where he/ she is residing
5.                E-mail id:   Email id to be mentioned. Kindly note that this email id will be required every year for doing e-KYC of the Director
6.                Mobile no.   Mobile Number to be mentioned. Kindly note that this mobile number will be required every year for doing e-KYC of the Director
7.                Income-tax PAN   10 digits Income Tax Permanent Account Number (PAN)
8.                Occupation:   Current Occupation of the person to be appointed as Director
9.                Date of birth:   Date of Birth as mentioned in PAN Card
10.            Nationality:   Nationality of the person to be appointed as Director
11.            No. of companies in which I am already a Director and out of such companies the names of the companies in which I am a Managing Director, Chief Executive Officer, Whole time Director, Secretary, Chief Financial Officer, Manager:   Number of companies in which the person is already a director, i.e.  other than the one for which this DIR 2 is being submitted should be mentioned here
12. Particulars of membership No. and Certificate of practice no. if the applicant is a member of any professional Institute. Specifically, state NIL if none:   If the person to be appointed as Director is a Chartered Accountant or Company Secretary or Cost and Management Accountant or Actuary, etc., he/ she should mention the Membership number allotted by the respective Institute

 

The Self attested copy of the PAN card and the address proof becomes the enclosures of the form DIR 2. The Form DIR 2 is required to be printed on a normal paper and to be signed by the person to be appointed as the Director of the company. This is submitted to the company which further does all the formalities in relation to appointment of a director.

 

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.

Director Identification Number

DIN is an identification number allotted by the Central Government to any person who is going to be appointed as director or to any existing director of a company.

Director Identification Number (DIN) [Section 152(3) and Section 153 TO 159]

 

DIN is an identification number allotted by the Central Government to any person who is going to be appointed as director or to any existing director of a company.

It is an 8-digit number and contains the detailed information about the director of the company.

Further the DIN shall be called as the Designated Partner Identification Number (DPIN) when it is referred to in relation to any Limited Liability Partnership.

 

Requirement of DIN

No person shall be appointed as a director of company unless he has been allotted the DIN.

 

Filing of Application for allotment of DIN [Section 153]

Every individual who is going to be appointed as director of a company shall make an application for allotment of DIN to the Central Government in the prescribed form with prescribed fees.

 

Procedure for making an application for allotment of DIN before appointment, Rule 9 of Companies Rule, 2014:

 

  • Every person who is going to be appointed as director of an existing company shall make an application electronically in Form DIR-3, to the Central Government along with prescribed fees.
  • The Central Government provides an electronic system for submission of application for allotment of DIN through the portal of Ministry of Corporate Affairs.
  • The applicant can download Form DIR-3 from the portal, fill in the required particulars, verify and sign it after attaching copies of the following documents, scan, and file all the documents electronically-
  • Photograph;
  • Identity proof;
  • Residence proof;
  • Signatures duly verified.

Form DIR-3 can be submitted electronically by the applicant using his/ her Digital Signatures Certificate.

  • In case the name of the applicant does not have a last name, then his or her father’s or grandfather’s surname shall be mentioned in the last name along with declaration (explained in written about the surname) in Form DOR-3A.

 

Allotment of DIN

The Central Government shall allot the DIN to the applicant within one month from the receipt of application.

 

Procedure for rejection of allotment of DIN, Rule 10 of the Companies Rule, 2014:

  • Generation of application number: On the submission of the Form DIR-3 on the portal and on payment of the prescribed fees, an application number shall be generated by the system automatically.
  • Communication of issue of DIN: After generation of application number, the Central Government shall process the applications received and the decide for the approval or rejection for the DIN and thereafter communicate the same to the applicant along with DIN allotted on case of approval by way of letter by post or electronically or in any other mode within a period of 1 month.
  • In case of defective/ incomplete application: If the Central Government, on examination of the application finds it incomplete or defective, it shall give intimation of the same by placing it on the website and by sending an email to the applicant who has filed such application.

The applicant is given a period of 15 days to rectify the defects or incompleteness by resubmitting the application.

The Central Government shall also-

  • Reject the application and direct the applicant to file a fresh application with proper and correct information.
  • Treat and label such application as invalid incase the defects are not removed.
  • Inform the applicant either by way of letter or electronically or in any other mode.

 

  • In case of rejection or invalidation of application, the fees so paid with the application shall neither be refunded nor adjusted with any other application.

 

Prohibition on obtaining more than one DIN

No individual, who has already obtained a DIN, cannot apply for the DIN again.

 

Director to intimate DIN

Every existing director shall intimate his DIN to the company within 1 month of the receipt of DIN.

 

Company to inform DIN to registrar

Every company shall within 15 days of the receipt of intimation of DIN of all the directors shall provide the same to the registrar or any other authority as may be specified by the Central Government with the prescribed fees.

 

Punishment for failure to provide DIN to Registrar

If any company fails to provide the DIN to Registrar, it shall be liable to a penalty of Rs. 25,000. In case of continuing failure, penalty of further Rs. 100 for each day after the first. Penalty can reach to a maximum of Rs. 1,00,000.

Further every defaulting officer of the company shall be liable to a penalty of minimum Rs. 25,000 and in case continuing failure, penalty of Rs. 100 for each day after the first which may increase to a maximum of Rs. 1,00,000.

 

Obligation to indicate DIN

Every person filing return, providing information or particulars are required to mention the DIN in such return or information.

 

Punishment for contravention of Section 152, 155 and 156 [Section 159]

If any individual or director of a company makes any default in complying with any of the provisions in relation to having more than one DIN and does not intimate Din to the company is prescribed time limits, shall be liable to a penalty up to Rs. 50,000 and if it continues, penalty with increase up to Rs. 500 each after the first one.

 

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.

 

 

 

 

Appointment of Directors [Section 152]

The procedure of appointing a director in the company.

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.

Legal Position of Directors

Directors are the individuals who are appointed to manage the business affairs of the company.

Legal Position of Directors

 

Introduction

 

Directors are the individuals who are appointed to manage the business affairs of the company. A company is a separate legal entity who has legal existence of its own, but it cannot manage its activities on its own physically. So, it needs to be managed by someone who can take care of all the business activities.

Now you might be thinking that why do we need a director for all this as every company has its shareholders who are physically available to manage the company.

The answer to your question is here, that as the number of shareholders grow, all of them together may not be able to manage the affairs, and if do so it shall lead to mismanagement and nothing else. That’s why the concept of directors has emerged to handle all the activities of the business. The director of the company may be elected from among the shareholders or from outside.

 

Legal Position of Directors

 

Directors can be considered as both, Agents and Trustees.

As Agents, they bind the company as their principal with proper rules and regulations. Also, where directors are empowered to take decisions, the company means the shareholders cannot issue directions directing them to go and take a particular decision.

As Trustees, the directors are required to take care of the properties, money etc. belonging to the company. In fact, as trustee the directors are in fiduciary relationship (it is when a person has a duty to act for the benefit of the other) with the company and if it gets broken and the company suffers losses because of the illegal acts of the directors, they shall be required to compensate for the losses suffered by the company.

 

Collective Body of Directors

 

The collective Body of Directors simply means the “Board of Directors”.

It is the ‘Board of Directors’ who takes decisions at any Board Meeting and not any individual director. This is the reason why the presence of minimum number of directors at the Board meetings is prescribed so that decisions can be taken collectively.

 

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.