According to the Companies Act 2013, a Private Limited Company needs to have minimum two directors while a Limited Company needs to have
minimum of three directors. Limited Liability Partnership (LLP), on the other side, needs to have minimum two designated partners as per the Limited Liability Partnership Act, 2008. A New Director is appointed by the shareholders of the company,
However an alternate director can be appointed by the board of Directors.
Situations that Lead to the Director Change
- If the director is removed
- If the director dies or resigns
- Assets of the company are not charged while issuing equity shares
- If the director stops holding the designation, office or title in the company that entitles the person to be an ex officio director,
- If the director becomes disqualified
To become a director the person need to first apply for a Director Identification Number (DIN), DIN allotment is an online process where an
eform known as DIR-1 needs to be filed along with declaration,
copy of pan card, address Proof and ID proof. The
eform needs to be digitally signed.
Directors are primarily responsible for smooth functioning of
business, to ensure that all legal compliances are met as prescribed
in law and within time. A director is considered as Key Managerial Person (KMP) in terms of the companies act 2013.
Any change in directorship needs to be informed to the concerned registrar of
company by filing
eform DIR-12 within a period of 15 days, failing to which the company will have to face penal consequences. The change can be due to death, retirement, removal, appointment or redesignation of the director.
Articles of association of a company
prescribes for conditions or qualification for a person to become the director in
company. It further prescribes the procedure by which a director can be appointed or removed. However, in the event of AOA being silent
on any point then the provisions of the companies act 2013 shall apply.
A director of the company can be removed by an ordinary resolution taken at a shareholders' meeting by the persons who are liable to exercise voting rights in the election of the director. The director of the company must be given the notice and information of the meeting and the copy of
resolution which is proposed to be adopted by the
Before voting or putting the proposed resolution of removing a director in the meeting, the concerned director must be
provided a reasonable prospect to make a presentation either in person or through a representative. A director can also be removed by order of the court that confirms the removal of the director from office.
Q1. What is Director Identification Number?
Ans: Director Identification number refers to a unique identification number that is allotted to an individual who is an existing director of a company or is proposed to be appointed as director of a company with reference to section 153 & 154 of the Companies Act, 2013.
Q2. Who signs e-Form DIR-6?
Ans: A chartered accountant and an applicant or a company secretary or cost accountant in practice needs to sign e-Form DIR-6.
Q3. Is Income tax PAN mandatory in order to apply for DIN?
Ans: Yes, Income tax PAN is mandatory for Indian nationals.