Provisions and Process of Appointment of Director in a Private Limited Company

The company is a legal person that needs a natural person for managing, directing, controlling, and overseeing the affairs of the company. It is a primary requirement for a Private Limited Company to appoint minimum 2 directors. In a private Limited company, the boards of directors can appoint or elect one person or more than one person as a director who implements and determines the policies of the company. In this article, we have discussed the process for Appointment of Director in Private Limited Company.

Who can be eligible to be appointed as a director in a Private Limited Company?

• The person who is appointed as a directors must be eligible as per the relevant clauses in the Articles of Association (AOA).
• The proposed individual must be a major i.e he must be above the age of 18.
• He or she must be qualified as per the laws and provisions mentioned under the Companies Act, 2013.
• The consent of the Members of the Board is mandatory for the appointment of the proposed individual as director.
• It must be noted that the Companies Act 2013 does not mention the requirement of any educational qualification in order to be eligible to become a Director.
• Indian National, Non-Resident Indian (NRI), and Foreign Nationals can be appointed as a director in India.

Documents Required for the Appointment of 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

 Process for the Appointment of the Director in a company 

Consent of the Director in Form DIR 2

The first step towards appointing a Director in a company is to take consent of the proposed Director. The Consent of the proposed director to act as a Director in the company shall be filed in Form DIR 2 with all the necessary Documents.

Obtain DSC and DIN of proposed Director

The next step would be to obtain Digital Signature Certificate (DSC) and DIN of the proposed Director of the Company. As far as DSC is concerned if he does not have the DSC, He shall obtain the DSC from the certifying authorities of India.

While the Director Identification Number is concerned, if the Director does not have the DIN, the first thing he needs to do is to inform the company about the same. Then the company shall pass a resolution regarding the same and apply for the DIN of the proposed Director in form DIR 3. The company shall file DIR 3 KYC with all the necessary KYC documents. The DIN so allotted shall be once only for the lifetime of the Director.

Call for a Board Meeting and EGM

The appointment of the director shall be made in a general meeting of the company. In this regard, the company shall issue notice to all the shareholders of the company informing them about holding an Extra Ordinary General Meeting of the company.

Once the notice to call for EGM is issued to all the shareholder, the next step shall be to hold the meeting on the decided date and time and pass all the necessary resolution for the Director’s Appointment of Director in the Company.

Issue letter of Appointment

After passing the resolution, the next step would be to issue letter of appointment to the Director of the company. The Appointment letter must mention terms and conditions of the appointment of the Director including the salary to be payable to him.

File Form DIR-12 to ROC

Once all the necessary steps are completed, the company should file Form DIR 12 to Registrar of Companies within 30 days from the date of appointment of the Director along with all the necessary documents.

 Conclusion 

After all the procedure is completed for the Appointment of Director, the company shall make necessary changes and entries in the Register of the Director and key managerial personals. Also, the changes are to be done in registers of contract and arrangements in which Directors are interested in Form MBP-4.