A Director is one of the most important and influential members of any company. The Directors decide the working and the goals of the company. Director or Directors are required to take regular decisions which affect the business operations of the company. When an investor or shareholder decides to place their capital then the Directors decides how to utilize and use it.
When a new Director is to be added, there are certain steps that need to be followed along with specific documentation.
Step 1: The first step to change or appoint a new Director is to obtain consent from the proposed new Director. It is must that the company obtains Form DIR-2 before proposing anyone as a new Director.
Step 2: Once the consent is taken by filing form DIR-2, next step is to get a Digital Signature of the Director. In case, the proposed Director doesn’t have a Digital Signature, they must get one from Certifying Authority in India.
Step 3: Get Unique and One-time Director Identification Number (DIN)
A Director Identification Number (DIN) is a unique number required by a person when he/she is proposed as the Director of any company. To apply for DIN, the company is required to pass Board Resolution for the proposed individual to be appointed as Director of the company. The Board Resolution is then attached with Form DIR 3 to obtain DIN for the individual proposed as the Director.
The Company also requires to obtain all the necessary Qualification Documents of the individual. Although there are no minimum qualification criteria to be appointed as the Director of a Company in India, the company must get all the documents and do their due diligence.
Step 4: The next step to appoint a new Director is to issue a notice at the General Meeting. The company must issue a notice to all the Shareholders of the Company to hold an Extra Ordinary General Meeting of the Company.
The notice for General Meeting must be issued in accordance with provisions of Companies Act, 2013 and Secretarial Standards issued by the Institute of Company Secretaries of India.
Step 5: Announce the candidate in the Extra Ordinary General Meeting of the Company. This is done by passing the necessary resolution for the appointment of Director as Company.
Step 6: Issue Letter OF Appointment and File Form DIR-12 to ROC
The Company then have to issue a Letter of Appointment for the new Director explaining all the terms and conditions along with salary details.
After that, the Company has to file From DIR-12 to ROC within a month of appointment.
Final Step: Make Entries in Register of Directors
The last step is for the Company to make necessary entries in the Register of Director and Key Managerial Personals. Finally, send an application for changes in Directorial Details in GSTN and other Certificates.
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