Nominee Director is a director appointed by the financial\ninstitutions or banks in the Board of Directors, subject to the provision of\nthe article of association. The Board may appoint a director nominated by any\ninstitution in pursuance of the provision of any law for the time being in\nforce or of any agreement or by the Central Government\/state government under its\nshareholding in a government Company.<\/p>\n\n\n\n
A Nominee Director is appointed for representing and safeguarding the interest of the financial institutions or investors on the board of the Borrower Company. The Nominee Director is appointed to perform the duty towards the Borrower Company and its stakeholders. The appointment of Nominee Director is generally made at its terms, and his office is liable to retire by rotation unless otherwise provided in the shareholder<\/a>’s agreement<\/a><\/strong>. The Nominee director acts as a watchdog for the Institutions or investors and also for monitoring the activities of the Borrower Company.<\/p>\n\n\n\n a)<\/strong> The nominee director should be nominated by any financial institution in pursuance of any law or terms of an agreement entered into by the company.<\/p>\n\n\n\n b)<\/strong> The appointment of the director by the Government or by any other person. <\/p>\n\n\n\n c)<\/strong> The person appointed as a Nominee director shall represent the interests of the organization \/Institution which he represents. <\/p>\n\n\n\n Nominee director of Special Financial Institution<\/strong>-In case of appointment\nof nominee directors of financial institutions established under Special Acts\nof Parliament having non-obstante provisions over the provisions of Companies\nAct,2013 and the articles of association of assisted companies, the company has\nto only take steps to note such appointment at a Board meeting and file the\nparticulars of the directors in Form No. DIR-12.<\/p>\n\n\n\n For example-Nominee of the banks IDBI, UTI, IFCI,\nLIC, SFCs etc. can be appointed directors on the boards of assisted companies,\neven without complying with the provision of articles and\/or companies\nAct,2013.<\/p>\n\n\n\n In the case where the nominee director is appointed in other\nfinancial institutions which are incorporated under the Companies Act,2013, the\nprovision of the Companies Act 2013 are to be complied with. The nomination can\nonly be made if there are provisions in the article of association of the\nassisted company. Further, the nomination conforms with the provisions of the\nCompanies Act, 2013. The nominee director should come within 1\/3rd of the total\nnumber of directors, the other 2\/3rd being liable to retire by rotation.<\/p>\n\n\n\n The\nfollowing procedure is required to be followed before appointing the Nominee\ndirector<\/p>\n\n\n\n 1. Check whether the article of the company contains the\nauthorization to appoint the nominee director as per the Companies Act 2013. In\ncase, if the article does not provide the same, alter the article to authorize\nthe company to appoint the Nominee Director. A nomination letter is received in\nfavour of the appointee Nominee director.<\/p>\n\n\n\n 2. To check whether the respective person has a DIN along\nwith DIR-3.<\/p>\n\n\n\n 3. To Check whether the consent in writing to act as a\ndirector in form DIR-2 has been taken from the proposed director.<\/p>\n\n\n\nKey points for appointing\nthe Nominee Director-<\/h2>\n\n\n\n
Nominee Director of other Financial Institutions-<\/h2>\n\n\n\n
Procedure for appointment of Nominee Director<\/h3>\n\n\n\n
Documents required as an attachment for DIN-<\/h4>\n\n\n\n