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The Legalities Pertaining To The Appointment Of A New Company Director

LegalKart Editor
LegalKart Editor 04 min read 519 Views
Last Updated: Nov 09, 2023
Know About The Appointment Of A New Company Director

The Significance Of The Leader In A Group 

No entity can exist efficiently & effectively without the existence and prevalence of a formal or official leader.  The same holds true for a company director. The director (or the directors) of a company lead the company through thick and thin. They motivate the company officials, personnel and staff towards meeting the vision and mission of a company. 

Also read The Unique Identity Of A Company Director As Per The Company Law.

The Decision To Change A Director/Appoint A New One In A Pvt Ltd Company 

In case, a company has to choose its new director and change an existing one, it is a big decision and involves various legal and other formalities and rituals.  As an existing director leaves and a new one comes up, it translates into a lot many changes. So, the company law has laid down various legalities and procedures while a company effects such a change. 

In Private Limited Company Directors plays main role in its functioning, Directors takes day to day decisions for business operations, Directors are key person in whom Shareholders of company trusts for their money invested, here in this article we will discuss about how a company can have new Director on its Board legally in India

You may also read The Removal Of A Company Director - Many Changes Are Painful


The Proposed Director Should Give His/Her Consent 

The proposed director should give his/her consent to act as Director in the Company as per Form DIR-2 , this is very important document and company must obtain form DIR-2 form before proposing him/her as the Director of the Company. 

Proposed Director Should Give His/Her Digital Signature

If proposed Director does not have Digital Signature , he must obtain Digital Signature from Certifying Authority in India.

Procure The Director Identification Number (DIN)
If the proposed Director does not have DIN , he should let the company know that he does not have ,and than the Company in which he is about to be appointed as Director is required to pass Board Resolution for proposing him to be Appointed as Director of the Company , the company should apply for DIN no of the proposed person. The Resolution is required to be attached with Form DIR 3.  ( This is new requirement for obtaining DIN , as new person cannot just apply for DIN if he is not to be appointed as Director in any Company. DIN is only allotted once for lifetime of Director.   

The Company should obtain all KYC documents along with necessary educational Qualification documents required as per terms of job, it is important to note that there is no minimum education qualification required to hold position of Director in the Company in India

A General Meeting Notice Should Be Issued 
The Director in the Company are appointed in the General Meeting , the Company should issue notice to all the Shareholders of the Company for holding Extra Ordinary General Meeting of the Company, Please note that Notice of General Meeting should be issued in accordance with provisions of Companies Act, 2013 and rules made there under and Secretarial Standards issued by Institute of Company Secretaries of India (ICSI).

An Extra Ordinary General Meeting of the Company Should Be Organised
Once the Notice of EGM is issued to the shareholders , now on the meeting date and time , hold the meeting and Pass the Necessary Resolution for Appointment of Director as Company.

Letter of Appointment Should Be Issued 
Now issue letter of appointment to the Director of the Company mentioning terms and conditions of appointment and salary to be payable to the Director.

File form DIR-12 to ROC
Once all the above steps are completed the Company should file Form DIR-12 to ROC within 30 days form the date of appointment of Director , It is always advisable to File the Form DIR-12 within next day of appointment, so as to avoid late filing and Additional Fee.

Make Required Entries In Register of Directors
Company should make necessary entries in the Register of Director and Key Managerial Personals. 

File Necessary Amendment Application to GST, Tax Authorities  Other regulators
The Company is required to make necessary application for Changes in Directors details in GSTN and Other Certificates, wherever applicable. 

Also read Know the various facts about Share Purchase Agreement

Conclusion

Changing a company director should be a smooth and natural process. It should not create disturbances, disruptions and ripples of disharmony or at least these things should be minimized. 

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