A Private Limited Company is undoubtedly one of the most common business entities in India. However, handling a company is not so simple. A company is a legal entity that requires the assistance of a natural person to take control and manage all its affairs.
The person who is given the responsibility to manage and keep the company growing without any pauses is known as the “Director”. In this article, we have gone through the process for the appointment of a Director in a Private Limited Company.
Requirements to become the director of a company
The appointment of the Director in a Private Limited Company is considered to be one of the most crucial matters in a company. A director may lead the company successfully or turn its fate upside down if the person appointed as the Director is inept. This is why certain requirements must be met for a person to be appointed as the Director of a Private Limited Company.
Here are the eligibility criteria that must be met for the Appointment of Director in a Private Limited Company
1. The individual proposed to be appointed as the Director must be a major. He/She must be above the age of 21.
2. The proposed individual should be qualified as per the laws and provisions mentioned under the Companies Act, 2013 and the relevant clauses written in the Articles of Association (AOA).
3. Another crucial condition to be eligible to be appointed as a Director in India is that the individual proposed to be appointed must have the permission of the members of the board.
These were a few requirements that the individual to be appointed as the Director should meet. Besides the eligibility criteria to become a Director, another important thing to know is that an individual doesn’t necessarily have to be an Indian Citizen to be appointed as the Director, He or She can be a Non-Resident Indian (NRI) or a Foreign National.
Documents Required To Add a Director To a Company
The appointment of a Director in a Private Limited Company can be a hectic process for a few, as not a lot of people have sufficient knowledge regarding the documents required to add a Director to a company. We have mentioned the list of documents required to smoothly appoint a director to a company down below.
1. A Pan Card is necessary for an Indian Applicant when being appointed as a Director in a Private Limited Company.
2. For a Foreign Applicant, their passport is required to be proof of their identity and nationality.
3. A copy of a resolution passed by the shareholders is required to prove that the shareholders of the Private Limited Company are aware of the appointment and have given their consent.
The consent of the proposed individual to act as a Director in the form DIR-2 is mandatory to depict that He/She is willing to act and perform in the best interest of the Company as the Director.
A self-attested copy of PAN, identity, and address proof (Aadhar card or Election card).
These are the few documents that will come to use while appointing a Director to a Private Limited Company.
Process for Appointing a Director In a Pvt Ltd Company
Now that you may have clarity over who is eligible to become a Director in a Private Limited Company and what documents will be used to do the same, it is time to go over the whole process step by step.
- Consent of the Director in Form DIR-2
The first step in the whole process is to obtain the consent of the proposed Director. The individual proposed to be appointed as the Director is supposed to fill the Form DIR-2 to prove his or her willingness to act as the Director of the company.
- Get The DSC and DIN
The next step would be to get the DSC and DIN of the proposed Director. If the individual proposed to be appointed as the Director fails to provide both, here’s what they can do:-
DSC:- To obtain a DSC, he or she must apply for it from the certifying authorities of India. Getting a DSC is not a lengthy process and can be easily done by the proposed Director.
DIN:- If the individual does not have a DIN, he or she must notify the officials of the company for the same. Subsequently, the company will pass a resolution regarding the same and apply for the DIN through Form DIR-3.
- A Board Meeting Must Be Called
The appointment of a Director in any Private Limited Company is a matter of great significance for all parties concerned. This is why, an Extra Ordinary General Meeting of the company must be called. All the shareholders should be informed beforehand through a notice which is to be issued by the company.
- Letter of Appointment
Once the resolutions have been passed, the individual proposed to be appointed as the Director must be issued a Letter of Appointment. The Letter of Appointment must have all the terms and conditions of being appointed as the Director apart from the salary which is payable to him.
- Form DIR-12 To ROC
After all the necessary steps have been taken, the company must file Form DIR-12 to the ROC within 30 days from the date of appointment of the Director along with the necessary documents.
Once all these steps have been done, the company must make the necessary changes in the register of the Director and key managerial personnel.
