Addition of New Directors

A Director in a company is an individual elected by the shareholders to manage the company’s affairs in accordance with the Memorandum of Association (MOA) and Articles of Association (AOA). As a company is a legal entity, it can only operate through the agency of a natural person, making a living person a necessity for the role of a director. The Board of Directors holds the responsibility for managing the company, and the appointment of directors can be required based on the needs of the shareholders.

How to Add a Director to a Private Limited Company:

In a Private Limited Company, directors play a pivotal role in its functioning, making decisions, and overseeing day-to-day operations. The process to add a director involves several key steps:

Consent of Proposed Directors: Obtain the consent of the proposed director, a crucial document required before proposing them to the Director of the Company, according to Form DIR-2.

Digital Signature Certificates (DSC): If proposed directors don’t have digital signatures, they need to obtain a DSC.

Director Identification Number (DIN): If the proposed director doesn’t have a DIN, the company should apply for it. DIN is a unique identifier used for a lifetime, obtainable for anyone above 18, regardless of nationality.

KYC Documents: Obtain all necessary KYC documents and educational qualifications as per job requirements. There’s no minimum educational qualification required to be a director in an Indian Private Limited Company.

Who is a Director in a Private Limited Company?

As per the Companies Act, 2013, a Director in a Private Limited Company is an individual appointed to the Board of the Company. The Board of Directors constitutes a group of individuals elected by the shareholders to oversee and manage the company’s affairs. Given that a company is a legal entity created by law, it can only operate through the actions of natural persons. Directors, therefore, act as the human agents through which the company functions, and they play a pivotal role in the management and decision-making processes.

In broader terms, a Director is an individual who administers, controls, or directs various aspects within the company. This role involves supervision, control, and management of the company’s operations. Directors are elected by the shareholders to guide the company’s policies, and they are individuals appointed or elected under the law. Authorized to manage and direct the affairs of the company, a Director holds a position of responsibility in ensuring the smooth functioning and strategic direction of the Company.

Types of Directors in a Company:

Managing Director: Holds substantial powers in managing company affairs, appointed through Articles of Association, an agreement, or resolution.

Whole-time Director or Executive Director: Engaged in full-time employment with the company.

Ordinary Director: Attends board meetings and participates in matters presented but not a whole-time or managing director.

Additional Director: Appointed by the Board between two annual general meetings, holding office until the next AGM.

Professional Director: Has professional qualifications and no pecuniary interest in the company.

Nominee Director: Appointed by banks or private equity investors providing equity assistance.

Minimum and Maximum Number of Directors:

Private Limited Company: Minimum of two directors, maximum of fifteen (can be increased by special resolution).

Limited Company: Minimum three directors.

One Person Company: Minimum one director.

Director Residency Requirement:

While there is no specific Companies Act, 2013 requirement prohibiting the appointment of foreigners or NRIs as directors, at least one director must have stayed in India for a total of 182 days in the previous calendar year.

Women Director Requirement:

Listed companies and limited companies with a paid-up share capital of Rs.100 crore or more or a turnover of Rs.300 crores must have at least one woman director.