Advisory Services
Audit
Consulting
ESG Advisory
RBI Registration
SEBI Registration
IRDA Registration
FEMA Advisory
Compliances
IBC Services
VCFO Services
Growing
Developing
ME-1
ME-2
EU-1
EU-2
SE
Others
Select Your Location
A Director may be defined as an individual who directs, controls or manages the affairs of the Company. A director is a person who is appointed to perform the duties and functions of a company in accordance with the provisions of the Company Act, 2013[1]. They are collectively known as the Board of Directors. In this article we shall discuss the aspects related to appointment of directors.
Every Company shall have a Board of Directors consisting of Individuals as director.
They play a very important role in managing the business and other affairs of the Company. The appointment of Directors is very crucial for the growth and management of the Company. Every Company shall have a Board of Directors consisting of individuals as directors.
Generally, in a public company or a private company subsidiary of a public company, two-third of the total number of Directors are appointed by the shareholders and the remaining one-third’s appointment is made as per Articles and failing which, shareholders shall appoint the remaining one-third. In a private company, which is not a subsidiary of a public company, the Articles can prescribe the manner of appointment of any or all the Directors. In case the Articles are silent, the Directors must be appointed by the shareholders.
The Companies Act also permits the Articles to provide for the appointment of two-thirds of the Directors according to the principle of proportional representation, if so adopted by the company in question.
Nominee Directors can be appointed by a third party or by the Central Government in the case of oppression or mismanagement.
Minimum number of directors differs from company to company:
Further, every Company should have one Resident Director (i.e. a person who has lived at least 182 days in India in the previous calendar year.)
Director’s appointment is covered under section 152 of Companies Act, 2013, along with Rule 8 of the Companies (Appointment and Qualification of Directors) Rules, 2014.
The Companies Act does not prescribe any qualifications for Directors of any company. An Indian company may, therefore, in its Articles, stipulate qualifications for Directors.
The Companies Act does, however, limit the specified share qualification of Directors which can be prescribed by a public company or a private company that is a subsidiary of a public company, to be five thousand rupees (Rs. 5,000/-).
Following documents are required for appointment of a person as Director:
Resident Director:
This is one of the most important changes made in the new regime, particularly in respect of the appointment of Directors under section 149 of the Companies Act, 2013. It states that every Company should have at least one resident Director i.e. a person who has stayed in India for not less than 182 days in the previous calendar year.
Woman Director:
Now the legislature has made mandatory for certain classes of the company to appoint women as director. As per section 149, prescribes for a certain class of the company their women’s strength in the board should not be less than 1/3. Such companies either listed company and any public company having-
Additional Director:
All public or private companies may appoint additional director. However, the articles should allow for it and such person shall not fail to be selected as director in general meeting. An additional director can be appointed in board meeting or by passing resolution by circulation.
The Companies Act prevents a Director from being a Director, at the same time, in more than fifteen (15) companies. For the purposes of establishing this maximum number of companies in which a person can be a Director, the following companies are excluded:
Failure of the Director to comply with these regulations will result in a fine of fifty thousand rupees (Rs. 50,000/-) for every company that he or she is a Director of, after the first fifteen (15) so determined.
It may be noted that as per the Companies Act of 2013, no person shall hold directorship in more than 20 companies and 10 in case of public company. In case you have any query related to appointment of directors, contact Enterslice.
Read our article: Procedure related to Shifting of Registered Office Under Companies Act, 2013
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
On 18th May 2023, the Securities Exchange Board of India (SEBI) released a Consultation Paper o...
Infrastructure and real estate have been regarded as India's "sunshine sector" since the turn o...
On 22nd May 2023, the Central Board of Direct Taxes (CBDT)[1] issued a new circular under secti...
Anyone can have different sources of income. With globalization and the opening up of economies...
The Reserve Bank of India (RBI) is crucial in regulating NBFC, including branch openings and cl...
In India, Non-Banking Financial Companies are subject to certain restrictions from taking publi...
It's usually a good idea to diversify the assets in your financial portfolio, especially during...
A nation is being built by the non-banking finance company through the development of wealth, t...
A corporate entity known as a portfolio manager complies with a contract or agreement with the...
Identifying and analysing risks associated with individual portfolio investments, such as equit...
Are you human?: 6 + 9 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
An Independent director is a part of the board of directors of a company that does not have any relation to the com...
18 Sep, 2019
There may be circumstances in which one has to change the name of the corporation or LLC name out of any reason wha...
19 Feb, 2018
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!