HOW TO APPOINT THE ADDITIONAL DIRECTOR OF A PRIVATE COMPANY

Appoint the additional Director

A private company is formed with minimum 2 directors on board at the time of incorporation of the company, however, directors can be added during the year, such appointment is valid until next AGM (Annual General Meeting) and in case of the company want to continue with the director, then, in that case, the company need to ratify his appointment in the next AGM.

Hence the appointment of additional director can be divided into two parts:

1. When a director is appointed During the Midyear until next AGM.

2. When a company wants to continue with the director after AGM.

Procedure for appointment of the additional director when a director is appointed During the Midyear for until next AGM:

1. AOA should permit the appointment of the additional director in case there is no such provision in AOA, then amend the AOA and include the clause for power/authorization to appoint Additional Director read with Section 161(1) of the Companies Act, 2013 
2. Apply for DIN, if required.
3. Pursuant to the Rule-8 of Companies (Appointment & Qualification of Director) Rules, 2014- obtain the Consent in writing to act as Director in Form DIR-2.
4. Pursuant to Companies (Appointment & Qualification of Directors) Rules, 2014, the proposed director is required to intimate in form DIR-8 stating that he/ she is not disqualified u/s 164(2) of Companies Act, 2014
5. Obtain MBP-1 (Disclosure of interest) even if no prior interest of the director is there with the company.
6. Once DIR-2 is filed, serve a notice to conduct Board meetings.
7. Pass the board resolution for the appointment of Additional Director.
8. Once the resolution is passed issue the Letter of Appointment to the proposed director.
9. File DIR -12 with the ROC with the following attachments 

• DIR-2 
• Letter of Appointment
• DIR-8
• Interest in other entities.

10. Once the appointment of a director is done, take a note of Disclosure of Interest u/s 184 and filing of form MGT.14 within 30 days of passing board resolution as desired by section 117(3) of Companies Act, 2013.

Note that when a person has tried to be appointed as a director in general meeting and that person fails to get appointed as a director in a general meeting, then that person can’t appoint as an additional director.

Procedure for the appointment of the additional director when a company wants to continue with the director after AGM:

Pursuant to Section 160 (1) of Companies Act, 2013 following is the procedure for such appointment:

• The proposed director shall serve a notice in writing putting up himself as the candidate for the director of the company. Note that such notice should be sent at least 14 days before the General Meeting left at the registered office of the company.
• A deposit of Rs 1, 00,000/- (Rupees One Lakh) rupees shall also be submitted along with the notice. 

The company shall serve the notice in writing to members at least seven days before the general meeting about such receipt of notice from the proposed director of his/her intention of and to propose such person as a candidate for that office. Note that notice is required to be sent 

 by serving individual notices, and for those members who have registered their email id with the company through electronic mode to such members for communication purposes or can put up such intention on the website of the company.

Note: It is not mandatory for the company to serve individual notices in case the company advertises such candidature or intention.

Such an advertisement must be made at least seven days before the meeting. The advertisement must be made at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and circulating in that district, and at least once in the English language in an English newspaper circulating in that district.

• The company shall thereafter pass an Ordinary Resolution for appointment of such person as directors of the Company.
• Form DIR-12 is required to be filed for a change in the designation of the director within 30 days of the passing of Ordinary Resolution.

See our Recommendation: https://swaritadvisors.com/change-in-directors