Addition of Director - MCA Compliance with YathraFin

• Section 149: Governs the minimum and maximum number of directors.
• Section 152: Covers appointment and qualifications of directors.
• Section 161: Allows for additional, alternate, and nominee directors.
• Companies (Appointment and Qualification of Directors) Rules, 2014: Specifies requirements and eligibility criteria for directors.

Eligibility Criteria for Adding a Director

• Age Requirement: The individual must be at least 18 years old.
• Nationality: Directors can be Indian or foreign nationals.
• Qualification: While there are no specific educational requirements, a director should possess the skills relevant to the business.
• DIN (Director Identification Number): The individual must obtain a Director Identification Number (DIN) from the MCA.
• Written Consent: The proposed director must provide a written consent to act as a director in the company (Form DIR-2).
• Disqualification Check: An individual is disqualified if they:
• Are declared insolvent or undischarged bankrupt.
• Are convicted of an offense and imprisoned for more than six months.
• Have failed to pay calls on shares of the company held by them.
• Have not completed previous compliance requirements (if previously a director).

Step-by-Step Process to Add a Director

• Step 1

  Obtain Digital Signature Certificate (DSC)

  The proposed director must obtain a Digital Signature Certificate for e-filing purposes.

• Step 2

  Apply for DIN (If Not Available)

  Apply for a DIN through Form DIR-3 if the proposed director does not already have one.

• Step 3

  Hold a Board Meeting

  Convene a board meeting to propose the appointment of a new director and pass a board resolution approving the addition of the director. Obtain written consent from the director (Form DIR-2).

• Step 4

  File Form DIR-12 with MCA

  Complete and file Form DIR-12 within 30 days of the director's appointment. Attach necessary documents, including the director’s consent, a certified copy of the board resolution, and proof of identity and address.

• Step 5

  Update Company Registers

  Update the Register of Directors and other relevant records to include the newly appointed director’s information.

• Step 6

  Disclosure by the Director

  The new director must disclose any directorships held in other companies (if any) within 30 days of the appointment.

Documents Required for Adding a Director

• Director's Consent: (Form DIR-2)
• Identity Proof: PAN card, Aadhaar card, or passport of the proposed director.
• Address Proof: Recent utility bill or bank statement (not older than 2 months).
• Board Resolution: A certified copy of the board resolution approving the appointment.
• DIN Allotment Letter: If applicable.
• Form DIR-12: Filed with MCA for official registration.

Types of Directors under the Companies Act

• Executive Director: Actively involved in company operations.
• Non-Executive Director: Not involved in day-to-day operations but participates in policy-making.
• Additional Director: Appointed by the board but must be regularized at the next AGM.
• Independent Director: Required for listed companies to ensure objectivity and independence.
• Alternate Director: Acts as a substitute for a director during their absence (usually applicable to foreign directors).
• Nominee Director: Represents a stakeholder, such as an investor or financial institution.

Benefits of Adding a Director

• Expanded Expertise: Brings in new skills and perspectives to enhance decision-making.
• Improved Governance: Increases accountability and strengthens governance practices.
• Enhanced Business Opportunities: Leverages the director’s network and industry knowledge.
• Compliance with Regulatory Requirements: Ensures compliance with minimum director requirements set by the Companies Act.