Directors of a Company – Appointment and Qualification of Directors Amendment Rules, 2022

Introduction

The Companies Appointment and Qualification of Directors Amendment Rules, 2022 were issued by the Ministry of Corporate Affairs (MCA) on June 1, 2022, to alter the Companies (Appointment and Qualification of Directors) Rules, 2014. Citizens of countries that share a land border with India must obtain security clearance from the government before being nominated to the boards of Indian firms, according to this rule. It is worth noting that the amendment regulations go into effect on June 1,2022. This article includes information on Director Amendment Rules, Changes in the Rule of DIN, and Information on Directors of a company.

Directors of a Company

The term “Directors” refers to the part of the Board of Directors that is in charge of overseeing, managing, and directing a company’s operations. Directors serve as trustees for the company’s property and funds, as well as acting as agents in transactions on the company’s behalf.

Section 149 of the Companies Act of 2013 defines the number of directors.

• A minimum of two directors must be present in any Private Limited Company.
• The maximum number of directors that a firm can designate is 15.
• After passing a special resolution in a general meeting, a firm may select more than 15 directors without the approval of the federal government.

Appointment and Qualification of Director Amendment Rules, 2022

With the Amendment Rules, 2022, the MCA added a new proviso to sub-rule (1) of Rule 8 of the Companies (Appointment and Qualification of Directors) Rules, 2014. 

• Every person who has been appointed to the position of director must provide the company with written consent to act as a director in Form DIR-2 on or before the appointment.
• Within 30 days of the appointment of a director, the company must file Form DIR-12 with the Registrar, along with the fee set forth in the Companies (Registration Offices and Fees) Rules, 2014.
• If the person seeking appointment is a national of a country that shares a land border with India, the necessary security clearance from the Ministry of Home Affairs, Government of India, must be attached along with the consent, according to the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022.

Know More: How to Appoint a Director in a Private Limited Company?

Documents required to appoint a Director of a company

• Self-attested copy of PAN (Permanent Account Number)
• 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

Important Note:

• • PAN card: Mandatory for an Indian Applicant
  • Passport: Mandatory for a foreign Applicant

Changes in the Rule of DIN (Director Identification Number)

• To obtain a Director Identification Number (DIN), the firm must register Form DIR-3 on the MCA portal and pay the required fees via online mode, according to the Companies (Appointment and Qualification of Directors) Rules, 2014.
• When the form is successfully completed, the system will generate an application number for you.
• Any person who is a national of a country that has a land border with India is required to obtain a DIN before receiving security clearance from the Ministry of Home Affairs.
• It is mandatory for the directors to attach the security clearance from the Ministry of Home Affairs, Government of India,

The director must give the following declaration to the Ministry in order to get the DIN:

• I am not obliged to seek a security clearance from the Ministry of Home Affairs, Government of India, before applying for a Director Identification Number (DIN).
• Before applying for a director identity number, I must get security clearance from the Ministry of Home Affairs, Government of India, as required by the Appointment and qualification of Director amendments in rule 10, which I have completed and attached.

Note: For companies it is compulsory to seek government approval before appointing directors from land-border sharing nations to their boards of directors under the new guidelines.

Conclusion

If any person seeking an appointment in an Indian company is a national of a country that shares a land border with India (i.e. Bangladesh, Myanmar, Pakistan, China,  Bhutan, Nepal, and Afghanistan), he or she must obtain and attach necessary security clearance from the Ministry of Home Affairs, Government of India, along with his or her consent in writing to act as such in Form DIR-2 on or before his or her appointment.