Updated : November 28, 2023DIR-2 (Consent to Become a Director) in Company : A Comprehensive Guide
Overview : To educate prospective directors in India on the significance, preparation, and submission of the DIR-2 form. This includes understanding the legal requirements, personal declarations, necessary documentation, and potential pitfalls associated with becoming a company director.
Becoming a director in a company requires compliance with various regulations and legal obligations. In India, the DIR-2 form is mandatory for anyone wanting to become a company director. This document plays a critical role in the Company Incorporation Process. This blog post aims to provide a comprehensive guide to the DIR-2 (Consent to Become a Director) document and its significance for potential directors. Our objective is to help aspiring directors comprehend the importance of this essential document and simplify the directorship consent process.
What is DIR-2 ?
If you want to become a company director in an existing company or as the first director during the new company incorporation process, you must fill out a form called DIR-2. This form is a declaration of your willingness and eligibility to take on the role of director, and it is mandatory for anyone who wishes to become a director to issue and sign this form as per the Companies Act of 2013. Rule 8 of the Companies (Appointment & Qualification of Directors) Rules, 2014, requires obtaining the DIR-2 from each director before appointment under section 152(5).
Importance of DIR-2 in a Company
Every director of an Indian company is required to provide their consent before taking up the position. This consent is documented in the form DIR-2 and is crucial for the company to comply with the Companies Act 2013. The importance of form DIR-2 lies in its significance in ensuring compliance with legal requirements and regulations.
- This statement is a form of self-certification that confirms the director’s eligibility. It also contains a positive declaration that the incumbent director is not disqualified to be appointed director of a private limited company.
- By consenting to become a director, the director assumes a fiduciary position and declares that he understands all the obligations associated with the role. This includes overall responsibility for compliance with all applicable laws and regulations, thereby reducing the chances of non-compliance and the resulting penalties.
- This provides legal protection to the company.
How to Submit DIR-2 ?
To obtain the DIR-2 form, please visit our website page. The director must fill in their information, sign the form, and attach their ID and address proof. Once completed, the filled form should be submitted to the company. If you are incorporating a new company, please attach the scan of Form DIR-2 to the Spice Plus form during the company incorporation process. Similarly, to add a new director to an existing company, please use the prescribed form DIR-12 and attach the scanned copy of Form DIR-2.
What to Include in the DIR-2 ?
- Name and DIN of the proposed director.
- Personal details, including address, nationality, and date of birth.
- Declaration from the proposed director stating their consent.
- Affirmation of not being disqualified from holding the directorship.
- Verification of identity proof and residence.
Common Mistakes to Avoid in DIR-2
Submitting the DIR-2 form may appear straightforward, but it can often result in errors that cause unnecessary delays. By paying attention to the following points, you can ensure that your DIR-2 form is error-free and expedite the approval process for directorship. To avoid any complications, make sure you take note of the following :
- Provide complete and accurate personal details.
- Ensure that your declarations and consents are correct and truthful.
- Sign the form correctly.
- Attach all the necessary supporting documents before submitting.
Conclusion
Aspiring directors must understand the significance of DIR-2 (Consent to Become a Director) in a company. This document is a crucial step towards directorship; completing and submitting it accurately is essential. This comprehensive guide provides all the necessary information and guidelines to make the process smooth and hassle-free. Follow the instructions carefully to ensure a successful journey to becoming a director.
