2. Add New Director

A company operates as an independent legal entity, with its daily functions directed by its board, which consists of appointed or elected directors. Shareholders elect these directors to guide the company’s activities, following the frameworks set in the Memorandum of Association (MOA) and Articles of Association (AOA). Companies may require additional directors for various reasons, whether to bring in specialized skills, replace a director, or meet the minimum directorship mandated by law. Below are details on the types of directors, documentation required, and steps for appointing a new director.

Common Reasons for Appointing a New Director

  1. Expertise Addition: Enhancing the board with specific skills or knowledge.
  2. Filling a Vacancy: Replacement due to retirement, resignation, or other circumstances.
  3. Operational Expansion: Allocating additional duties while maintaining strategic oversight.
  4. Regulatory Compliance: Meeting legal requirements on minimum board members.

Types of Directors and Their Roles

  • Managing Director: Holds significant authority to oversee company affairs, as set out in the AOA, a board resolution, or an agreement.
  • Whole-time or Executive Director: Involved in the company’s daily management and is a full-time employee.
  • Ordinary Director: Participates in board decisions but does not have extra responsibilities or special powers.
  • Additional Director: Appointed between annual general meetings to fill temporary needs; holds office only until the next AGM.
  • Alternate Director: Temporarily appointed for a director who will be out of India for three months or more.
  • Professional Director: Added for specific expertise, providing strategic insights.
  • Nominee Director: Often appointed by banks or investors to represent their interests on the board.

Documentation Needed for Adding a Director

  1. Identification: PAN for Indian citizens, passport for foreign nationals.
  2. Address Proof: Utility bill, lease agreement, Aadhaar card, passport, voter ID, or driving license.
  3. Passport-Size Photo.
  4. Digital Signature Certificate (DSC).
  5. Director Identification Number (DIN).

Steps to Add a New Director

  1. Check the Articles of Association (AOA): Confirm the AOA permits adding directors; if not, amend it.
  2. Obtain Consent: The new director must provide written consent to serve, documented on Form DIR-2.
  3. Board Resolution: The board should pass a resolution in a general meeting approving the appointment.
  4. Secure DSC and DIN: Obtain the required DSC and DIN for the incoming director.
  5. File Documentation: Submit Form DIR-2, Form DIR-12, and Form DIR-8 to the ROC to finalize the appointment.

Note: Navigating the legal and procedural steps can be time-intensive. Professional support can simplify the process and save valuable business time.

Service Packages for Adding a Director

  1. Essential Plan
  1. Description: Assistance in adding a director already possessing a DSC and DIN.
  2. Service Charge: ₹4,499 (government fees excluded).
  3. Professional Plan
  1. Description: End-to-end assistance for a director with a DSC but without a DIN; includes DIN application.
  2. Service Charge: ₹5,699 (government fees excluded).
  3. Comprehensive Plan
  1. Description: Full-service package covering all steps, including the cost of one DSC and one DIN.
  2. Service Charge: ₹6,799 (government fees excluded).

Estimated time frame: 5-8 business days, based on document submission and regulatory approvals.

Frequently Asked Questions (FAQ)

  • Eligibility for Director Appointment: A candidate must be a legal adult, meet qualifications under the Companies Act, 2013, and receive board approval.
  • Restrictions on Director Eligibility: Bankrupt individuals or those under court restriction are disqualified.
  • Can a person with a criminal record be appointed? Yes, unless restricted by court order.

Is shareholding required for a directorship? Not unless stipulated by the company’s AOA.