Change in Business Company Registration

Appointment of Alternate Director

Alternate Director is the Director appointed by the Board of Director i.e. The Board of Director of a Company if so authorized by the Articles of Association or by passing a resolution in the General Meeting appoints a person-

• Who is not holding any alternate directorship for any other director in the company or,
• Holding any directorship in the same company

to act as an alternate director for a director during his absence for a period not less than 3 months from India.

Key points for Appointing the Alternate Director

Applicability for the Appointment of the Alternate Director-Applicable to All Companies

1. Power to appoint the Alternate Director vests with the Board of Directors. However, the original director on whose behalf the alternate director is being appointed has no right to appoint the Alternate Director.
2. The position of the Alternate Director is not of a representative, proxy or agent of Original Director.
3. 1 Alternate Director can be appointed for 1 director.
4. The duties of the alternate director are as same as of any other director. i.e. the Alternate director is a director in his own rights.
5. No person shall be appointed as an alternate director for an Independent director unless he is qualified to be appointed as an Independent Director.
6. An Alternate Director shall not hold the office for a period longer than the time period permissible to the director in whose place, the alternate director has been appointed.
7. The Alternate Director shall vacate the office if and when the director in whose place he has been appointed returns back to India.
8. If the tenure of the original director on whose behalf the alternate director is appointed is determined before he returns to India, in the case of in default of another appointment the provision for the automatic re-appointment of a retiring director shall apply to the original director and not to the Alternate Director.

Sections and its Applicability

• Section 149(1) – Alternate Director and Original Director shall be counted as one for a minimum statutory limit of Public Company and Private Company.
• A Women Director can be appointed as an Alternate Director.
• Section 149(4)-(12) – Alternate Director shall be appointed as Independent Director as per the Definition of Independent Directoras per Section 149(6).
• Alternate Director shall hold DIN, give declaration and liable to file DIR-2 with the ROC as per Section 152(3), (4) & (5).
• Except in the case where the Original Director is an Independent Director, The Alternate Director and Original director shall be counted as one in case of a  total number of directors for counting Rotational and Non-Rotational Directors as per section 152(6) &(7).

Procedure to appoint the Alternate Director

The following procedure is required to be followed for appointing the alternate director-

1 – To check whether the Article of Association permits the Company to appoint the Alternate director. Additionally, check whether the article authorizes the Board of Directors to appoint the Alternate Director.

• Alter the article of association accordingly or,
• Pass a resolution in the Company’s general meeting by authorizing the Board of directors to make the appointment.

2 – Written consent to act as a director shall be obtained, where it is proposed to appoint a person as an Alternate director.

3 – To check before the appointment of Alternate director in the Board meeting, the   Alternate director has obtained DIN (Director Identification Number). However, in the case where the director is not having DIN, a director is required to make an application to the Central Government for obtaining the DIN and also to ensure that the respective director has informed the same to the Company regarding his DIN. Further, a declaration is required to make that a person is not qualified to become a director under the provisions of the Companies Act, 2013.

Documents Required as an attachment for DIN-

•  Identity Proof of the applicant
•  Address Proof

4 – After giving notice to all the directors, convene a Board Meeting. The Board may by passing the resolution may approve the appointment either at a Board meeting or by circulation.

• The notice shall be issued to the directors not less than 7 days before the date of the meeting.

• The Agenda of the meeting must be disclosed.
• Passing the Board resolution for the appointment of the Alternate Director.

• To authorize the Company Secretary, or in case of absence of the Company Secretary the director to sign the relevant documents and to file the same to the ROC.

5 – To ascertain that the consent of the respective director, as well as the declaration from the director, has been obtained.

6 – The particulars of the directors have to be filed by the company in the Form DIR-12 with the Registrar of the Companies within 30 DAYS of the appointment after paying the requisite fee electronically.

Documents to be attached for filling the DIR-12   

• Name and DIN of the original director in whose behalf the alternate director is appointed.
• Disclosure of interest in other entities.
• Consent of the Alternate Director in Form DIR-12.
• CTC (Certified true copies of the Board resolution passed for the appointment)^[1] of the Alternate director.
• Letter of documents and other documents as may be required.

7 – Make necessary entries in the register of directors by obtaining the detailed information of the directors.

8 – Disclosure after the appointment i.e. the alternate director shall inform the other companies in which he is the director in form MBP-1 about the appointment.