Online Adding a Director - Overview
Adding a director to a company can be a complicated procedure. However, in order for the appointment to be genuine and legally acceptable, the proper processes must be followed. The method for appointing a director vary dependent on the type of company and the jurisdiction in which it is established. However, most visits follow a few typical phases.
Add/Change Directors of a Company.
A company's directors may need to be added or changed for a number of reasons. For Example, A company may need to add a director to expand its board of directors due to a resignation, retirement, removal, or death of an existing director. The company might need additional skills or experience on the board, such as legal, financial, or industry-specific knowledge and Adding a new director allows the existing board to delegate tasks and responsibilities more effectively without diluting ownership of the company.
Types of Director of a Company
Directors of a company can serve in various capacities and roles, each with its own set of responsibilities and duties. Here are some common types of directors:
- Executive Directors: These directors are typically involved in the day-to-day management of the company's operations. They may hold titles such as CEO (Chief Executive Officer), CFO (Chief Financial Officer), COO (Chief Operating Officer), or other executive positions. Executive directors are responsible for implementing the company's strategic plans, overseeing departments, and ensuring the organization's overall performance.
- Non-Executive Directors: Non-executive directors do not engage in the company's daily management but instead focus on providing independent oversight, strategic guidance, and accountability. They bring diverse expertise and perspectives to the board and play a crucial role in decision-making, risk management, and governance.
- Independent Director:In companies where the chairperson role is combined with the CEO position or when the chairperson is not independent, a lead independent director may be appointed. This individual helps coordinate the activities of the independent directors, serves as a point of contact for shareholders, and provides feedback to the chairperson and CEO.
Procedure for Appointing Directors in the Company
The procedure for appointing directors in a company in India involves adhering to the Companies Act, 2013, and following specific steps:
- Identify the need for a director: The decision to appoint a new director usually starts with identifying the need based on the company's requirements, expansion plans, or statutory requirements.
- Identify potential prospects: Once the need for a new director has been identified the following stage is to find suitable candidates. This can be accomplished by internal recruiting, external recruitment firms, or professional networks.
- Board Resolution: The board of directors must pass a resolution to appoint a new director. This typically involves proposing a candidate and voting on their appointment during a board meeting.
- Consent and Declaration: The person proposed as a director must give their consent to act as a director and provide a declaration confirming that they are not disqualified from being appointed as per the Companies Act or any other relevant legislation.
- Fill out all necessary form with the Registrar of Companies (ROC): Once the resolution has been passed, the corporation must submit the necessary paperwork to the ROC. This form will include the director's consent to serve as a director and a certification that they satisfy the eligibility requirements.
Eligibility to Be a Director of a Company
The eligibility criteria to be a director in a company vary depending on the jurisdiction and the specific laws and regulations governing corporate governance. However, there are some common eligibility requirements that apply in many jurisdictions.
- The individual must be at least 18 years old (Section 164, Companies Act, 2013).
- The individual must be of sound mind and capable of understanding and fulfilling the responsibilities of a director (Section 164(2), Companies Act, 2013).
- The individual must not be disqualified from being a director under the Companies Act or any other law (Section 164(2), Companies Act, 2013).
Document Required for Appoint a Director
- The Pan Card of Director
- Proof of identity: This can be any government-issued ID card such as a PAN card, Voter ID, Aadhaar card, or passport.
- Proof of Address: This can be a utility bill (electricity, water, telephone), bank statement, or rental agreement (notarized if the landlord is not a relative).
- Digital signature certificate (DSC) of the director
- Form DIR-12: After the appointment is made, Form DIR-12 needs to be filed with the Registrar of Companies (ROC) within 30 days of appointment.
Resolution for Appointing a Director in the Company
A Resolution for the Appointment of a Director is a legal document approved by a company's Board of Directors or shareholders in order to appoint a new director to the board.
- The name of the director is being appointed.
- Date of appointment
- The term of the appointment (if applicable).
Additional important information, such as the director's credentials or experience The resolution should be approved in accordance with the company's bylaws or articles of organization. In some situations, the appointment of a director may require shareholder approval.