APPOINTMENT OF ADDITIONAL DIRECTOR  UNDER COMPANIES ACT. 2013

Objective

The purpose to introduce the concept of Additional Directors is if in case the board of directors needs one more director to handle the workload then he has the power to appoint One additional director on urgent basis at board meeting bypassing board resolution for the appointment of an additional director without holding the general meeting.  The formality of the general meetings took time so the intention to introduce this to overcome the problem of directors.

A new director designated by the Board of Directors of the Company to the Board is called an Additional Director. Board of Directors of a Company has the forces to delegate new Directors to the Board subject to consistence of arrangements of Articles of Association and arrangements Companies Act, 2013. Such Directors are called as Additional Directors and will hold office till the following Annual General Meeting (AGM).

Some important factors belongs to additional director

• Appointment

Just an Individual can be additional director of company. The Board shall comprise of individuals not of different people like firms, LLP, organizations, gods or other legal persons.

• Tenure

An additional director is appointed in the company till the date of next annual general meeting. If the annual general meeting is not conducted, than the tenure of these directors will be the last date until the annual general meeting must have being held.

• Powers and Responsibilities

Nevertheless, the appointment of these directors are done for temporary basis, but still these directors have all the powers same as the normal directors. If these directors are to be appointed for permanent in the company, than these directors are to be regularised as directors in the annual general meeting.

• Number of Additional Directors

The total of directors and additional directors taken together shouldn’t exceed the number mentioned in the Articles of Association. For example, if the Articles of Association of a company allows the appointment of 11 directors in total, and the company presently has 5 full-time directors, than the Board may appoint 6 additional directors.

Further the Board isn't approved to name any individual as an extra director whose resolution for appointment is disapproved or disliked by the investors in an extraordinary general meeting.

• Eligibility of Additional Directors for Re-appointment

Section 160 of The Companies Act 2013 provides any person other than retiring directors has the right to apply for the post of directorship. Such a director is eligible for the post provided that a valid notice in writing is sent to the registered office of the company aleast 14 days before to the meeting of shareholders proposing such person as a director.

• Additional Director as a Managing Director

An additional director can be appointed as company’s managing director. The appointment doesn’t mean the additional director get away with the requirements of the discontinuance of term on the date of annual general meeting, but extra executive may apply for re-appointment, and if elected again, may proceed the arrangement of a managing director.

• Counted in Quorum

These directors are counted in the quorum of the board meeting which is one third of the strength or two directors whichever is higher.

• Position of an Additional Director

The Additional Director has same rights, powers, duties and liabilities as any other directors.

Documents required for appointment

• Person must have DIN Number; otherwise apply DIN and DSC first.
• KYC of directors ( PAN, Adhar, Email Id and Phone Number ).
• Consent to act as a Director of a Company in DIR-2 Form.
• Intimation by Director in DIR-8 about disqualification.
• Disclosure of Interest in MBP-1.
• Signed copy of Board Resolution.

Procedure for Appointment of Additional Director

First and foremost step is to check the power in Articles of company, if there is no power of appointment as an additional director then suggestion to amend the articles and insert the power as per the required provision of the Companies Act, 2013.

1. Secondly after arranging the documents, call the Board Meeting.
2. Pass the board resolution for appointment of Additional Director.
3. File DIR-12 to Registrar of Companies within 30 days from passing Board Resolution.
4. Pay the requisite fee at the prescribed rates.
5. Forms get approved and details of additional directors will be updated on the MCA portal.

Board Resolution for the appointment of additional director 

Passing board resolution for the appointment of an additional director is important because there is a number of reasons that the board members may select to document their actions with an official resolution. Necessarily, in any situation where board members want or need to protect themselves if anyone questioned their attention to important matters is a reason to pass a board resolution.

Regularization of Director

After appointment of extra chief, it's required to regularization of executive at the forthcoming general meeting by filing a form DIR-12 with recommended charges.

Under any circumstances, if the resolution isn't put before the general meeting or not went at the general meeting, the workplace of such additional director shall automatically vacate. In the event that the chief's arrangement isn't passed by the investors in the general meeting, at that point he can't be delegated as an additional director by the board in the future.

The additional director so designated by the Board will be called as “Additional Director” on records of Registrar of Companies. When the investors support the arrangement of Director at a General meeting, the status will be updated as ‘Director’ and from that point the such chief will be known as ‘Director’ on records of Registrar of Companies.

Conclusion

When a business faces the same situation for appointment of additional directors and wants to appoint further one more director without being indulging in hectic compliances so he can do by following the process of additional director. Neusource Startup Minds are here to serve you with the procedure for appointment and all legal formalities. Here a team of professionals indulge in doing the work on regular basis. Contact us for more information so that your business can run in smooth manner.

For further queries please contact us on: Email Id Swati@neusourcestartup.com and Phone Number 9540026175.

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Neha Puri

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