A company is a legal entity because people are appointed to run the company, which means it can sue and be sued. These people who are appointed to run a company’s affairs are called directors of the company. The directors of a company are collectively called the board of directors.
Who Is A Director?
A Director is a professional appointed as ‘Officers’ of the company, by a company to run the company’s affairs. The Companies Act, 1956 defines Directors as ‘any person occupying the position of director in a company’. It is important to note that the position an individual occupies, the duties and functions a person carries out determines whether s(he) is a director of the company or not, and not just the title of Director. The minimum number of directors a Private Limited company must appoint is 2 and the maximum is 15, though the upper limit can be increased from 15 by passing a special resolution at a general meeting.
The Articles of Association authorizes an individual to function as a director of a company, to contract on the company’s name and its behalf. The Articles of Association may authorize and specify its directors to the role of board of management, members of the governing council, governors, etc. but, in the eyes of the law they are classified as Simple Directors.
Minimum Requirements To Become Director
In order to become the director of a Private Limited Company in India, an individual needs to be/have:
- At least 18 years old
- An Indian Citizen
- A Foreign Citizen that has resided in the country for 182 out of 365 days
- Director identification Number (DIN)
- Digital Signature Certificate (DSC)
- No Criminal Record or imprisonment sentence
Appointment Of Directors (Companies Act, 2013)
In a Private Limited Company, the first directors are appointed in the manner prescribed in the Articles of Association. If the Articles are silent on the appointment of directors, then any or all of the directors will be appointed by the shareholders of the company. The Articles (if mentioned in it) can permit a company to appoint 2/3rd of its directors on the basis of proportional representation as per section 149(1) and 152 of the Companies Act, 2013.
- Appointment of Additional Director
If the articles of Association permits a company to appoint additional directors, then they can be appointed for a term of one Annual General Meeting (AGM) to the next. An individual who has not been appointed as a director cannot qualify for the post of additional director.
- Appointment of Nominee Director
A nominee director is one appointed by a third party or the Government in the case of mismanagement or oppression.
- Appointment of Managing Director
A person being appointed to the position of managing director can hold the same position for multiple Private Limited Companies with a restriction of 20 on the number of directorships. He/she is an individual that is appointed for a 5-year term. If a director has membership in more than 20 Private Limited Companies, he will be punishable with a fine of INR 5000-25000 for each day, and each company over and above the stipulated limit.
- Appointment of Woman Director
All companies incorporated under the companies Act, 2013 need to comply with the requirement of having at least one woman director on the company board, except private companies and OPC.
- Appointment of Alternate Director
The appointment of alternate directors should be authorized in the Articles of Association of a company. An alternate director is appointed to take the interim place of a full-time director until another director is appointed.
Procedure For Allotment Of DIN Through DSC
- Every individual that intends to be director of the company must electronically apply through Form DIR-3 (application for allotment of DIN). The person should fill in particular details along with attachments of a photograph, proof of identity, proof of residence, and verification by the applicant in form DIR-4.
- Form DIR-3 shall be signed and submitted online by an applicant using their own Digital Signature Certificate (DSC) which shall be verified by Chartered Accountant (CA), a cost accountant or a Company Secretary (CS).
- The form is then submitted online and either approved or rejected. If approved, a DIN will be allotted to the directors of the company.
Every company shall maintain a registry containing the following details of the directors and key management personnel: DIN number, Full name, Father’s/mother’s/spouse’s name, date of birth, residential and permanent address, occupation, date of appointment, membership number, the number of securities purchased, date of acquisition of securities, mode of acquisition, etc.
How Can We Help?
Every private company must have at least two directors, and thus, this mandates that a promoter uses his digital signature (a service provided by esignDesk.com) to apply for DIN. Only then can an individual become a director in a company. We provide digital signature services at optimal rates and several other services can be effectively achieved with the help of a DSC (such as incorporation services, signature on official documents, etc.).