Director Appointment
Process, Eligibility, & ComplianceAre you planning to appoint a director for your Company? Speak to our Compliance Expert for a quick guide on the director appointment process, including obtaining DIN and DSC, filing DIR-12 with the ROC, obtaining required documents, and ensuring legal compliance to ensure a seamless transition.
Setindiabiz is Trusted By Leading Brands
Director Appointment
The directors are responsible for the day-to-day functioning of the company and the general compliance with the company's applicable laws and regulations. The board of directors can appoint a person as an additional director to fill the casual vacancy or emergent requirements of such appointment subject to the confirmation by the shareholders in the EGM or AGM. In case the additional director so appointed is not confirmed on or before the AGM, the appointed director will vacate the office of the director immediately.
The board of directors can appoint a director, where the appointment is contingent upon the shareholder's approval in the forthcoming EGM or the AGM. The second method would be to appoint a regular director, where the board adopts a resolution for the appointment of the director subject to the approval of the shareholder in the extraordinary general meeting that is called immediately for this purpose. The second method is the correct approach, which avoids accidental vacations in the director's office.
Appointment Methods
The appointment of a director is governed by the Companies Act 2013 and varies based on the type of Director being appointed. While shareholders usually appoint regular directors in an annual general meeting, casual directors are appointed by the board to fill temporary vacancies that arise due to specific reasons. The following table provides an understanding of both types of director appointments:
| Criteria | Regular Director Appointment | Casual Director Appointment |
|---|---|---|
| Governing Section | Section 152 of the Companies Act,2013 | Section 161(4) of the Companies Act, 2013 |
| Appointing Authority | Shareholder in general meeting or Board (if authorised by AOA) | Board of Directors |
| Approval process | Requires an ordinary resolution in the Annual General Meeting (AGM) | The Board of Directors appoints the director through a Board Resolution subject to shareholders' approval in the next AGM. |
| Applicability | All companies appoint directors as part of a regular board structure | The board temporarily appoints a director to fill a vacancy caused by an existing director's death, resignation, or disqualification, with the position to be reviewed at the next AGM. |
Timeline for Director Appointment
1 day
Obtaining DSC
The applicant must submit relevant identity and address proof documents for verification within one to two days to obtain a Digital signature certificate (DSC).
1-2 Days
Obtain Director Identification Number (DIN)
One of the prerequisites and first steps for a person proposed to be a director is obtaining a DIN, a unique eight-digit number allotted by the MCA with lifelong validity and no renewal requirements. However, every individual holding a DIN must comply with the annual KYC process (Form DIR-3) to maintain its active status.
1-2 days
Consent & Declaration Filing
The applicant must provide consent to act as a director in Form DIR-2 and a declaration in Form DIR-8 under section 164 of the Companies Act 2013
1 day
Board Resolution for Appointment
The company’s board must pass a resolution approving the appointment, which usually takes 1 day.
2-4 days
Filing DIR-12 with ROC
Once the appointment is approved, Form DIR-12 is filed with the ROC. The application processing takes 2 to 4 days, depending on the regulatory workload.
Eligibility For Director Appointment
At Setinidabiz, we make it easy for you to understand and meet the criteria for appointment as a company director in India. Our structured checklist provides a smooth process.
Minimum Age Requirement
The person should be at least 18 years old and above, ensuring that the person has attained legal age and can take on the responsibilities associated with the role.
Maximum Age
As per Section 196 of the Companies Act,2013, the person should be below 70 years to be appointed as Managing Director, Whole-time Director, or Manager. However, an appointment at 70 or beyond requires a special resolution with justification.
Natural Person Mandate
Only natural persons (not a corporation), according to the Companies Act 2013, mandate that only individuals, not business entities, can hold directorial positions.
Not Disqualified under Section 164
The individual should not fall under the disqualification outlined under Section 164 of the Companies Act, 2013, which includes clauses regarding insolvency, criminal convictions, and non-compliance with corporate regulations.
Director Identification Number
Anyone intending to become a director in an Indian company must have a valid DIN (Director Identification Number). Form DIR-3 must be filed with the Ministry of Corporate Affairs (MCA) to secure a DIN.
Documents Required
At Setindiabiz, we recognise that thorough documentation is crucial for the seamless appointment of a Company director. The process requires submitting your identity and address along with regulatory filings. Below is a detailed table outlining the required documents.
| For Director Appointment | For Company Records & ROC filing |
|---|---|
|
|
Stepwise Process for Director Appointment
For a Director appointment in India, obtain a Digital Signature Certificate and Director Identification Number. Adhere to the Companies Act 2013, get the board resolution approval, and file the essential forms with ROC. We provide end-to-end Director appointment service.
Step - 1
Checking Articles of Association (AoA)
Before appointing a director, the Articles of Association (AoA) must be verified to determine whether the appointment requires a shareholders' meeting or if the Board can appoint a director, subject to confirmation at the next General Meeting.
Step - 2
Obtain DSC & DIN
The proposed director must get a Digital Signature Certificate (DSC) and a Director Identification Number (DIN) issued by the MCA. To apply for the DIN, submit Form DIR-3, proof of identity, and residential address.
Step - 3
Board Resolution Approval
The board must call a meeting to pass a resolution approving the director's appointment. The resolution must include the appointee's name and role and the board members' approval and be recorded in the meeting minutes. If required, shareholder approval is obtained in an AGM or EGM through an ordinary resolution.
Step - 4
Obtain Consent & Declaration
The proposed director must submit written consent (Form DIR-2) confirming voluntary appointment, being aware of their duties and responsibilities, and declaring non-disqualification (Form DIR-8) under Section 164 of the Companies Act,2013.
Step - 5
File Forms with ROC
After the director’s appointment, the company must file the director’s consent (Form DIR-2), particulars of appointment (Form DIR-12), and other required documents on the MCA portal through online filing within 30 days of the appointment.
Step - 6
ROC Verification & Approval
After applying, the ROC examines the details and updates the directory information in the company's master records. If any discrepancies arise, the ROC can request additional documentation or clarification.
Government Fees for Director Appointment
| No. | Particulars | Fees (INR) |
|---|---|---|
| 1 | DIN Application (DIR-3) | 500 |
| 2 | ROC Filing Fees (DIR-12) | 300-600 |
| 3 | DSC Registration | 1200 - 2500 |
Penalty For Non-Compliance
Failure to file DIR-12 within 30 days of appointment can result in a penalty, including:
Overdue Penalty
A daily fine of INR 100 per day for non-compliance, resulting in increased costs.
Penalty for company and officer in default
The company and its officers who fail to file may incur a fine of up to INR 50,000.
Director Disqualification
Repeated failure to comply with statutory requirements can result in the removal of a director, restricting them from holding director positions in any company for a specified period.