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Director Appointment

Process, Eligibility, & Compliance

Are 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.

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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:

CriteriaRegular Director AppointmentCasual Director Appointment
Governing SectionSection 152 of the Companies Act,2013Section 161(4) of the Companies Act, 2013
Appointing AuthorityShareholder in general meeting or Board (if authorised by AOA)Board of Directors
Approval processRequires 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.
ApplicabilityAll companies appoint directors as part of a regular board structureThe 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.

1

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.

2

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.

3

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.

4

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.

5

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 AppointmentFor Company Records & ROC filing
  • 1
    Passport-sized Photograph
  • 2
    Copy of Aadhar Card/Voter ID/Driving License
  • 3
    PAN Card copy (Must for Indian Directors)
  • 4
    Address Proof (Utility bill or rental agreements)
  • 5
    Digital Signature Certificate(DSC)
  • 6
    Director Identification Number (DIN)
  • 7
    Consent Letter (Form DIR-2) &Declaration of Non-Disqualification (Form DIR-8)
  • 1
    Copy of the Resolution passed by the board for Appointment
  • 2
    Form DIR-12 (Filing for Director Appointment)

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.ParticularsFees (INR)
1DIN Application (DIR-3)500
2ROC Filing Fees (DIR-12)300-600
3DSC Registration1200 - 2500

Penalty For Non-Compliance

Failure to file DIR-12 within 30 days of appointment can result in a penalty, including:

1

Overdue Penalty

A daily fine of INR 100 per day for non-compliance, resulting in increased costs.

2

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.

3

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.

Frequently Asked Questions

The appointment process includes obtaining DSC and DIN, passing a board resolution, obtaining the director's consent, filing DIR-12 with the ROC, and receiving final approval from the ROC.

The eligibility for an individual to become a director should be 18 years old or above, have a valid DIN, and not be disqualified, according to the Companies Act 2013, to be appointed director.

The documents required include a PAN Card, Aadhaar or Voter ID, utility bill or rental agreement, Digital Signature Certificate (DSC), Consent Form DIR-2, and Declaration of Non-Disqualification (DIR-8).

The process typically takes 5 to 7 working days, depending on document submission and ROC approval timelines.

The government fees vary, including INR 500 for DIN application, INR 300-500 for ROC filing of DIR-12, and INR 1,000-2,500 for DSC registration.

Non-compliance can result in fines of up to INR 50,000, late filing fees of INR 100 per day, and potential director disqualification.

Directors can be appointed online by obtaining a DSC and DIN, passing a board resolution, and submitting DIR-12 electronically on the MCA portal.

DIR-12 is an e-form that is mandatory for filing with ROC within 30 days of the appointment or resignation of a director. The form includes details such as the director's name, DIN, appointment date, and required documents.

The director's primary functions are overseeing the company's management, making important decisions, ensuring statutory compliance, safeguarding shareholder interests, and leading the company towards its goals.

Yes, a foreigner can be appointed as the director of an Indian company. They must obtain a valid Director Identification Number(DIN) and Digital Signature Certificate (DSC) and submit a notarised copy of their passport and proof of address.

Each company will have at least three directors in the case of a Public Company, two in a private company, and one in a One-Person company. A company can have up to 15 directors but may appoint more than 15 if a special resolution is approved during a general meeting.

There are different types of directors in a company, such as the Executive Director, Non-Executive Director, Independent Director, Nominee Director, Additional Director and Alternate Director.

A director’s responsibilities include:

  • Ensuring legal and statutory compliance under the Companies Act, 2013.
  • Acting in the best interests of shareholders and stakeholders.
  • Overseeing financial management and risk assessment.
  • Ensuring transparency in decision-making and corporate governance.
  • Approving policies, budgets, and business strategies for company growth.

The company can remove a director in the following ways:

  • By Shareholders: A special resolution is passed in a general meeting to remove the director under Section 169 of the Companies Act, 2013.
  • By Resignation: A director can voluntarily resign by submitting a resignation letter, which must be recorded in a board meeting and reported to ROC via DIR-12.
  • By Disqualification: A director can be disqualified due to non-compliance with legal obligations or failure to meet statutory criteria.

A Director is responsible for managing the company’s operations and decision-making. In contrast, a Shareholder is an owner of the company who invests capital and holds shares but may not be involved in day-to-day management. Shareholders appoint directors to run the company efficiently and ensure profitability. They have voting rights but do not necessarily manage the company.

Yes, an individual can hold director positions in multiple companies; however, under Section 165 of the Companies Act 2013, a person cannot hold a directorship in more than 20 companies at a time. Out of these, not more than 10 can be public companies.

A Digital Signature Certificate (DSC) is an encrypted electronic signature used for filing documents online with government authorities. It ensures data authenticity and security. Directors require a DSC to sign e-forms like DIR-12, ensuring compliance with MCA regulations.

The board of directors appoint additional directors when there is a need for an extra board member, often due to business expansion or the resignation of an existing director. The steps include:

  • Conducting a board meeting to propose the appointment.
  • Passing a board resolution and recording it in the meeting minutes.
  • Obtaining consent from the new director in Form DIR-2.
  • Form DIR-12 must be filed with the ROC within 30 days of the appointment.
  • The additional director serves until the next AGM, where shareholders may confirm their appointment as regular directors.

The appointment of a director is confirmed in a shareholders’ meeting through a formal resolution. The process includes:

  • Issuing a notice for the general meeting with details of the proposed director’s appointment.
  • Discussing and voting on the resolution by shareholders.
  • If approved, file Form DIR-12 with the ROC to update the company’s records. The new director assumes full responsibilities after confirmation.