Process of Appointment of Additional Director (AD) as well as Managing Director (AD)
The process and provision of appointment of a person as Additional Director in Board Meeting. For this purpose Companies have to comply with Following Sections:
1. 161(1) Appointment of Additional Director
2. 170(2) Filing of Form for Appointment of Director
As per Companies Act, 2013 Section 152, Power of appointment of Director vested with Shareholder of Company by passing of resolution in General Meeting. However, as per Section 161(1), if power is given in AOA then Board of Directors can appoint director of the Company with some conditions.
Concept of Additional Director:
- As per Section 161(1) of Companies Act, 2013 confers power to the Board of directors appoint a new director to the Board of Directors. The director so appointed by the Board of Directors of the Company is called as ‘Additional Director’.
- For appointing an additional director, the Board of Directors may , if authorized by the articles, appoint additional director.
- Additional Director has all the liabilities, responsibilities, powers etc same as director appointed in Section 152.
- Additional Director appointed in 161(1), shall hold office only up to the date of Annual General Meeting of Company. If the AGM of the company is not held or cannot be held the person appointed as additional director vacates his office on the last day on which AGM should have been held.
Provisions in relation to Additional Director Appointment:
- Additional Director can be appointing by Board of Directors.
- Additional Director can be appointed in Board Meeting by passing board resolution.
- BOD cannot appoint an individual as Additional Director if he is rejected by GM or if he is lost from being appointed as director in GM.
- Term of additional Director shall be up to next Annual General Meeting
- Additional Director can be regularized in any general Meeting after appointment in Board Meeting.
- Company shall file DIR-12 within 30 days of passing of Board Resolution.
- If additional director not regularized in AGM his tenure cease on the date of AGM.
- After cessation company is required to file e-form DIR-12.
Why Additional Director is Required:
- In case of excess work load in the company which cannot be managed by existing BODs.
- In case if company requires the technical expert to solve technical difficulty.
- In case of the emergency in the company.
- In case the quorum of the BM is not present for substantial period.
- If BOA falls below statutory minimum.
- Any other reason justifiable.
Process Appointment of Additional Director Board Meeting:
- As a first step for appointment of a Director in a Company, the appointee must have a valid DIN allotted by the Ministry of Corporate Affairs.
- Board meeting is required to be convened for approval of appointment of proposed Director. In the meeting, required resolutions to be passed for appointment of proposed Director as an Additional Director of the Company.
- After the Board meeting, a Return of Appointment of Directorship (Form DIR-12) is required to be filed with Registrar within 30 days of appointment with copy of Board Resolution along with Consent and Declaration.