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Appointment and Regularisation of Additional Director as per Companies Act, 2013

Narendra Kumar

| Updated: Sep 14, 2019 | Category: Compliances

Appointment-and-Regularisation-of-Additional-Director

Director is considered as the face of the Company and they are the ones who make the decision on a day to day basis. As per section 149(1) of the Companies Act, 2013 only an individual can be a Director of the Company. If the Board of Directors wants one or more Director to be appointed in a Company for any reason and without conducting annual/extra General Meeting, the Board can appoint an individual as an Additional Director of the Company.

Which section is governed by the Companies Act, 2013 for the appointment of the Additional Director?

Section 161(1) of the Companies Act, 2013 is governed for the appointment of the Additional Director

Points to be remembered

  • Any individual who is proposed to be appointed as an Additional Director in the Company first needs to be authorized by the Article of Association of the Company. If not authorized then it needs to amend the Article of Association.
  • The Individual who is going to be appointed as the additional director must have avalid DIN.
  • To ensure that the maximum number of directors don’t exceed after appointing an additional director as prescribed under the Companies Act, 2013.
  • The appointee is not disqualified for appointment as a Director.

What are the Duties and Liabilities of Additional Director?

The duties and liabilities of the additional director are the same as the other directors are on Board. The duties and responsibility which include but not limited to:

  • It shall act according to the Article of Association of the Company.
  • It shall act in good faith, to promote the object of the Company and in the best interest of the Company.
  • The director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
  • The director of a company shall not have any direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
  • The director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain or advantage, he/she shall be liable to pay an amount equal to that gain to the company.
  • The Director shall not assign his office or any assignment so made shall be void.
Notes: If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

Procedure for Appointment of Additional Director

  • Check the Article of Association of the Company;

First, check the Article of Association of the Company whether it is authorized for the appointment of additional Director if not authorized by the Article of Association then it needs to alter the Article of Association to insert enabling clause for the appointment of the Additional Director.

  • Allotment of DIN and Obtaining DSC

For appointing an individual as an additional director in the Company the appointee must hold the DIN number. If the appointee is not holding the DIN then it required to apply, the application for allotment of DIN can be applied through the Company in which he/she proposed to be appointed as an Additional Director. To apply for the DIN the Digital Signature Certificate (DSC) is also required of the appointee.

  • Board Meeting approval for the appointment of Additional Director

The proposed Director if already holding the DIN then the Board Meeting to be convened for the appointment of the Additional Director and for the same the resolution is required to be passed. Once the resolution is passed Form DIR-12 is required to be filed with the Registrar of Companies within 30 days from the date of passing of the resolution.

Documents required for the appointment of the Additional Director

  • DIR-2 Consent to act as a Director to be taken from the proposed Director before the appointment.
  • DIR-8 intimation by Director that he is not disqualified under section 164(2) of the Companies Act, 2013.
  • MBP-1 Disclosure of Interest by Director.
  • Appointment Letter to be issued by the Company.
  • The Resolution passed at the Board Meeting for the appointment of Additional Director.

Regularization of Director

The Individual who is appointed as an additional director in the Company his/her term will be up to the ensuing General Meeting of the Company. After getting approval from the shareholder he/she will be regularized as a Director of the Company.

Procedure for Regularization of Director

The additional director intending himself or Member proposes him/her to appoint as a Director, a notice of not less than fourteen days must be given to the Company along with the deposit of Rupees One Lakh* before the date of General Meeting which shall be refunded to such person if the person proposed gets elected as a Director or gets more than twenty-five percent of total valid votes cast either on a show of hands or on a poll of such resolution.

Inform the Members at least seven days before the date of the General Meeting of the Company. It is not necessary to serve the individual notice to the Shareholder if the Company advertises such candidature not less than seven days before the meeting at least once in a vernacular newspaper in a principal vernacular language of the district in which the registered office of the Company is situated and at least once an English language in an English newspaper circulating in that district.

Convene the general meeting and pass the Ordinary Resolution for the same.

File the Form DIR-12 with the registrar of companies within 30 days from the date of passing of the resolution approved by the Members.

1. In case of private Companies depositing of Rupees One Lakh does not apply.

2. In case of Nidhi Companies Rupees Ten thousand to be deposited instead of Rupees One Lakh.

Conclusion : –

The Company can appoint additional Director if authorized by the Article of Association of the Company and if appointed then the term of an additional director shall be up to the ensuing General Meeting of the Company. The duties and liabilities of an additional Director are same as duties and liabilities vested to other directors. So if any Company intending to appoint as additional director and want the process to be followed as per the company Act, 2013, we are having the experienced professional team to carry out the above mentioned process. Kindly contact us at ENTERSLICE.

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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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