[image: DSCN0214.JPG]*DIRECTOR CA- 2013*
*APPOINTMENT OF DIRECTORS UNDER THE COMPANIES ACT, 2013*
As we are aware that Companies Act, 2013 is already in force from April 01,
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, the law has become more stringent for
private companies than for public 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. 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.}
*Minimum No. of Directors as per Section 149(1)(a):*
Ø Three in case of Public Company.
Ø Two in case of Private Company.
Ø One in case of One Person Company.
*Maximum 15 Directors**L** (If company want to appoint more than 15
directors Special Resolution Required to pass in General meeting**)-
Procedure {Simple Process of Holding of Extra-Ordinary General Meeting,
which we use in other Matters also) *
*New Categories of Directors:*
*v **Resident Director:*
As per Section 149 sub section 3 of Companies Act 2013, Board of Directors
of a company, must have at least one resident director i.e. (A person who
has lived at least 182 days in India in the previous *calendar year)*
*As per General Circular No. 25/2014 The* residence requirement would be
reckoned from the date of commencement of section 149 of the Act i.e. 1st
April, 2014, The first previous calendar year, for compliance with these
provisions would, therefore, be Calendar year 2014. The period to be taken
into account for compliance with these provisions will be the remaining
period of calendar year 2014 i.e. 1st April to 31st December).
Ø *Therefore, on a proportionate basis, the number of days for which the
director(s) would need to be resident in India. During Calendar year.2014,
shall exceed 136 days. *
Ø Regarding *Newly Incorporated Companies* it is clarified that
companies *incorporated
between 01.04.2014 to 30.09.2014 **should have a resident director* *either
at the time of incorporation OR within six months of their incorporation*.
Ø Companies *incorporated after 30.9.2014* need to have the resident
director from the date of incorporation itself.
*v **Women Director:*
As per Section 149 (1) (a) second proviso requires certain categories of
companies to have *At Least One Woman* director on the board. Such
companies are any listed company, and any public company having-
1. Paid Up Capital of Rs. 100 cr. or more, or
2. Turnover of Rs. 300 cr. or more.
v *Independent Director*:
Independent Director is for the first time introduced in the Companies Act,
2013 under section 149(6) (*ARTICLE ON INDEPENDENT DIRECTOR CAN BE VISIT BY
GIVEN LINK *
http://www.simpletaxindia.net/2014/08/independent-directors-requirement.html
*or CAN GET BY MAIL TO ME ON *csdiveshgoyal@gmail.com*)*
*v **Additional Directors: *
Any Individual can be appointed as Additional Directors by a company under
section 161 of the New Act. *(COMPLETE PROCESS OF APPOINTMENT OF ADDITIONAL
DIRECTOR ALONG WITH DRAFT GIVEN BELOW.)*
*v **Nominee Director**:*
As per Section 161(3). *Subject to AOA of company*, the Board *May*
appoint *any
person* as a director nominated by any institution in pursuance of the
provisions of any law for the time being in force or of any agreement or by
the Central Government or the State Government by virtue of its
shareholding in a Government company.( According to term:* Subject to AOA
of company *mean there should be provisions in Articles of Association of
Company for appointment of Nominee Director, if there is no provision in
Articles of company then alter the provision in AOA).
v *Alternate Directors:*
As per Section 161(2) A company *May* appoint*, if the articles confer such
power* on company or a resolution is passed (if an Director is *absent* *from
India for atleast three* *months).*
ü An alternate Director cannot hold the office longer than the term of the
Director in whose place he has been appointed.
ü Additionally, he will have to vacate the office, if and when the
original Director returns to India.
ü Any alteration in the term of office made during the absence of the
original Director will apply to the original Director and not to the
Alternate Director.
*Appointment* *of* *directors* *in private companies as per new law:*
*Practicing Company Secretary*
The liberty given to private companies to self-regulate
the appointment process has, *surprisingly, been completely taken away
Under Companies Act-2013*. This sounds completely paradoxical, in view of
the 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. Certain
specific requirements for appointment of director as lay down in the New
Act are-*
If 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 than first directors of company shall be appointed in
general meeting as per Section 152(2). If company Want to appoint a person
as director in meeting other then General meeting Company can do this by
appointing such person as additional director.
*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 in a
general 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 can't 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:*
Ø 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.
Ø Second Check whether such person have DIN No. or Not. If such person
doesn't 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
)
Ø Following documents are require from director to appointment him as
additional director.
ü Consent in writing to act as Director in *Form DIR-2* pursuant to Rule-8
of Companies (Appointment & Qualification of Director) Rules, 2014- *FORMAT
Get by mail to me.*
ü Intimation by Director in form *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.*
ü 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.*
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).
*After receiving all the documents from the director:- **FORMAT Get by mail
to me*
üCall the Board Meeting.
üPass Resolution for appointment of Additional Director.
üIssue Letter of Appointment.
üFile e-form *DIR-12* [Along with CTC+ Consent + Letter of Appointment)
üFile e-form *MGT-14*[For disclosure of interest in MBP-1]
Now this person will be Additional Director Till AGM of company. If company
want to appoint him as director then regularize the person as director in
General Meeting by Share holder Resolution. File form DIR-12 for Change in
Designation of Director along with ordinary resolution.
*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!
[image: thank you.jpg] *(Author - CS Divesh Goyal, ACS is a Company
Secretary in Practice from Delhi and can be contacted at
csdiveshgoyal@gmail.com <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
cross-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 same and this cannot be quoted before any authority
without the written consent of the author*
Regards,
CS Divesh
Goyal
PRACTICING COMPANY SECRETARY
+91-8130757966
csdiveshgoyal@gmail.com
*SUGGESTIONS, COMMENTS AND QUERIES SOLICITED.*
------------------------------------
Posted by: Nitesh More <moreassociate@gmail.com>
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