CS Divesh Goyal

Practicing Company Secretary

GOYAL DIVESH & ASSOCIATES

Mob: +91-8130757966
EMAIL: csdiveshgoyal@gmail.com

PROCEDURE FOR APPOINTMENT OF DIRECTORS UNDER

COMPANIES ACT- 2013

GOYAL DIVESH & ASSOCIATES, Practicing

Company Secretary
SERIES

DIRECTOR CA- 2013

Series-32

NO- 32

As we are aware that Companies Act, 2013 is already in force from April 01ST, 2014, and every
professionals is trying his/her best to unlock and decode the provisions of Companies Act, 2013. In this
regard an attempts have been made from my side to compile the procedure for appointment of
Additional Director in Public Company/ Private Company (Purely Private) taken the route of
appointment of Director by Board.
With the new Companies Act,
Act, the law has become more stringent for private companies than for public
companies,
companies, Moving from the Companies Act 1956 to the Companies Act 2013 is like shifting from your
old house to a new one. In the old house, where you have stayed for years, everything would have found
its own place the shoes, the clothes, umbrella, first aid, brooms, and whatever else you need in your
household. Your legs can find their own way, even in pitch dark of night they know the way to the
bathroom, to the stairs, they even know where the stairs end.
Directors of a company hold the most crucial position in the Company. With the new Companies Act,
2013 (New Act) already in force, their position has become even more significant than ever before.
They are now formally included within the definition of key managerial personnel or KMP under
Section 2(51) of the New Act.
As per Section 149(1): Every Company shall have a Board of Directors Consisting of Individuals as
Director. (It is clear to understand from this line that only an individual can be director of company.
Director
Some persons have doubt that other than individual can be director or not). According to this section
ONLY AN INDIVIDUAL can be director of company. {The Board shall consist of individuals not of
other persons like firms, LLP, companies, gods or other legal persons.}

CS Divesh Goyal
Practicing Company Secretary
GOYAL DIVESH & ASSOCIATES

Mob: +91-8130757966
EMAIL: csdiveshgoyal@gmail.com

Minimum No. of Directors as per Section 149(1)(a):

Three in case of Public Company.

Two in case of Private Company.

One in case of One Person Company.

Directors
 (If company want to appoint more than 15 directors SPECIAL RESOLUTION
Maximum 15 Directors
Extra-Ordinary General
Required to pass in General meeting)- Procedure {Simple Process of Holding of ExtraMeeting, which we use in other Matters also)
Appointment of directors in private companies as per new law:
Practicing Company Secretary, GOYAL DIVESH & ASSOCIATES
The liberty given to private companies to self-regulate the appointment process has, surprisingly, been
Act--2013
2013. This sounds completely paradoxical, in view of the
completely taken away Under Companies Act
fact that in case of public companies, they still have the liberty to self-regulate to the extent of one third
of the board strength.
Sec 152 (6) (b) provides liberty, but only to public companies, to appoint one third of the total board by
a self-regulated process. While there was an exception to private companies in Sec. 255 (2) of the 1956
Act, that exception has been dropped while transporting the provisions into the new Act.
It could not be the case that such was the intent of the lawmaker there is absolutely no case for
imposing more stringent regulations in case of private companies, than in case of public companies.
Section 152 of the New Act governs the appointment of directors.
directors. Certain specific requirements for
appointment of director as lay down in the New Act areareIf different person are not named as first director in articles of the company, individual subscribers shall
be deemed to be first directors. Every director other
other than first directors of company shall be appointed
appointed
in general meeting as per Section 152(2).
152(2). If company wants to appoint a person as director in meeting
other then General meeting Company can do this by appointing such person as Additional Director U/s
161(1) of Companies Act, 2013.
ADDITIONAL DIRECTOR:
Ensure that the director to be appointed by board of directors exercising the power so conferred in them
by the Articles of the company is not such a person who has failed to get appointed as a director
director in a

CS Divesh Goyal
Mob: +91-8130757966
Practicing Company Secretary
EMAIL: csdiveshgoyal@gmail.com
GOYAL DIVESH & ASSOCIATES
general meeting.
meeting (If A proposal is made in General Meeting for appointment of a person as Director, if
resolution got failed not passed in that meeting and that person fails to get appointed as a director in a
general meeting, then that person cant appoint as additional director). The additional director has to be
appointed till date of next AGM or last date, on which AGM should have been held, whichever is
earlier.
PROCEDURE:

First Check whether Articles (AOA) of the Company contain power/authorization to appoint
Additional Director read with Section 161(1) of the Companies Act, 2013. {If there is no
provisions in Articles of the Company then Alter the Articles of the company to have enabling
clause for appointment of Additional Director.

Second Check whether such person have DIN No. or Not. If such person doesnt have DIN No.
then Apply for DIN.
(FOR

PROCEDURE

OF

APPLICATION

OF

DIN

CLICK

ON

GIVEN

LINK:

http://www.simpletaxindia.net/2014/07/procedure-to-obtaining-din-director.html) and
(My coming Article SeriesSeries- 38 will be on Procedure for application of DIN mail me at
csdiveshgoyal@gmail.com . . . . . . . . .)

Third following Documents Are Requiring from Director to appoint him as Additional Director.
 Consent in writing to act as Director in Form DIRDIR-2 pursuant to Rule-8 of Companies
(Appointment & Qualification of Director) Rules, 2014- FORMAT Get by mail to me at
csdiveshgoyal@gmail.com . . . . . . .
 Intimation by Director in form DIR
DIR--8 in terms of Companies (Appointment &
Qualification of Directors) Rules, 2014, to the effect that he/ she is not disqualified u/s
164(2) of Companies Act, 2014.- FORMAT Get by mail to me at
csdiveshgoyal@gmail.com.
csdiveshgoyal@gmail.com. . . . . .
 Advisable to take disclosure of Interest in Form MBP-1 pursuant to Section 184(1) read
with Rule 9(1) of Companies (Meetings of Board and its Powers) Rules, 2014. {One thing
should be noted MBP-1 should not be dated earlier than date of his/her appointment as
Director}. - FORMAT Get by mail to me at.
csdiveshgoyal@gmail.com.
csdiveshgoyal@gmail.com. . . . . .
However, if there is nothing to disclose on the part of new Director, even then also require to take form
MBP-1 from Director. (NIL disclosure is also a disclosure under section 184(1).
Fourth after receiving all the documents from the director:director: Call the Board Meeting.
 Pass Resolution for appointment of Additional Director.

CS Divesh Goyal
Practicing Company Secretary
GOYAL DIVESH & ASSOCIATES
 Issue Letter of Appointment.

Mob: +91-8130757966
EMAIL: csdiveshgoyal@gmail.com

 File e-form DIRDIR-12 [Along with DIR-2 + Letter of Appointment+ DIR-8+ Interest in other
entities.)
 Make necessary entries in the Register of Directors along with their Shareholding, if any,
maintained u/s 170 of Companies Act, 2013.
Now this person will be shown as Additional Director till AGM of company. His tenure will be upto
AGM of Company.
Board resolution for taking note of Disclosure of Interest and filing of form MGT.14
Form MBP.1 given by the Additional Director, towards disclosure of interest u/s 184, should be taken
note of by the Board of Directors through a separate Board Resolution in next Board Meeting (In the
First Board Meeting after appointment of Additional Director).
Hence it is duty of the company to pass board resolution to take note of disclosure of interest by Director
and file a copy of that board resolution in MGT.14 within 30 days of passing board resolution as desired
by section 117(3) of Companies Act, 2013.
IF THE SECTION IS VIOLATED
Since the 8-lakh odd companies, sitting with more than 16-lakh directors, may not even be aware of this
change of law, what is the provision gets violated? There you have section 159 to take care of which
provides for a jail up to six months, of course with/without a fine too!
APPOINT ADDITIONAL DIRECTOR AS DIRECTOR OF COMPANY:
COMPANY:
If company wants to appoint additional director then there is need to regularize such person in the
General Meeting of Company.
By following above mentioned procedure a person can be appointed as additional director of company
but to appoint him as permanent director of company procedure as given below:

As per Section 160 (1) of Companies Act, 2013:

If he, or some member intending to propose him as a director, steps involved. (He denotes Additional
Director).

Other Person or additional director himself at lease 14 days before the General Meeting left at
the registered office of the company,

CS Divesh Goyal
Mob: +91-8130757966
Practicing Company Secretary
EMAIL: csdiveshgoyal@gmail.com
GOYAL DIVESH & ASSOCIATES
 A Notice in writing under his hand signifying candidature as a director.

 Along with the deposit of Rs. 1,00,000/- (Rupees One Lakh) rupees.
The company shall, at least seven days before the general meeting, inform its members of the
candidature of a person for the office of a director or the intention of a member to propose such
person as a candidate for that office:


by serving individual notices, on the members through electronic mode to such

members who have provided their e-mail addresses to the company for communication
purposes, -

in writing to all other members

by placing notice of such candidature or intention on the website of the company, if any

Note: Provided that it shall not be necessary for the company to serve individual notices upon the
members as aforesaid, if the company advertises such candidature or intention, at least seven days before
the meeting at least once in a vernacular newspaper in the principal vernacular language of the district
in which the registered office of the company is situated, and circulating in that district, and at least
once in English language in an English newspaper circulating in that district.
After completion of above process:
process:

The company will pass Ordinary Resolution for appointment of such person as directors of the
Company.

File e-form DIR-12 for change in designation of director within 30 days of passing of Ordinary
Resolution.
(Author CS Divesh Goyal, Company Secretary in Practice,
Practice, from Delhi GOYAL DIVESH &
ASSOCIATES and can be contacted at csdiveshgoyal@gmail.com) Disclaimer: The entire contents of this
document have been prepared on the basis of relevant provisions and as per the information existing at
the time of the preparation. Though utmost efforts has made to provide authentic information, it is
suggested that to have better understanding kindly crosscross-check the relevant sections, rules under the
Companies Act, 2013. The observations of the author are personal view and the authors do not take
responsibility of the
the same and this cannot be quoted before any authority without the written consent of
the author
SUGGESTIONS, COMMENTS AND QUERIES SOLICITED.