FAQ's on Directors under Companies Act

FAQ's on Directors under Companies Act Q55: What is DIN A55: DIN is a unique identification number issued to a prospective director by the DIN cell of Ministry of Corporate Affairs (MCA). An individual should hold a DIN before being appointed as a director in any Company. Q56: Is it mandatory for a director to hold digital signature A56: A director who is already holding a DIN can obtain a digital signature, though it is not mandatory. If a person is not holding DIN and intends to be appointed as a Director in a Company, he should obtain a digital signature for making an application for obtaining DIN to the DIN cell. Q57: Who can be appointed as director A57: As per the provisions of Section 152 of the CA, 2013, an individual holding a valid DIN and not disqualified from being appointed as Director under Section 164 of the CA, 2013, is eligible to be appointed as Director. He shall give his consent to act as a director in writing along with the disclosure of his interest and a declaration that he is not disqualified to become a director under CA, 2013. Q58: What are the broad steps involved in appointment of a director A58: The broad steps involved in appointment of a director are: Obtain DSC; Obtain DIN by filing Form DIR-3; Declaration that he is not disqualified from being appointed as the Director in form DIR-8; Written consent of director for his appointment in form DIR-2; Interest of the Director if any, in any other entity in form MBP- 1; Approval of Board of directors by Board Resolution; Approval of Shareholders by shareholders Ordinary Resolution; Intimation of appointment of director to ROC in Form DIR-12 Directors 17 Q59: Can a director be appointed by the Board of a company A59: Although, as per the provisions of Section 152 of the CA, 2013, the directors of the Company are required to be appointed by the shareholders of the Company in general meeting, the Board of the Company, if authorised by the AOA of the company can appoint director under following circumstances: Appointment of additional director; Appointment of nominee director; Appointment of alternate director; Appointment of director for filling casual vacancy Q60: What shall be the effective date of resignation of a director A60: As per the provisions of Section 168(2) of the CA, 2013, the resignation of a director shall take effect from the date on which the notice is received by the company or the date specified in the notice, whichever is later. Q61: What are the procedures to be carried out by a director at the time of resignation from the company A61: As per the provisions of Section 168 of the CA, 2013 read with Rule 15 and Rule 16 of the Companies (Appointment and Qualification of Directors) Rules, 2014, a director may resign from his office in the following manner: (i) by giving a written notice to the Board; and (ii) shall forward a copy of his resignation along with detailed reasons to the ROC in Form DIR-11 within 30 days of resignation. In case of resignation of a foreign director, such a foreign director can authorize in writing a practising chartered accountant or cost accountant in practice or company secretary in practice or any other resident director of the company to sign Form DIR-11 and file the same on his behalf with the ROC. The Company on receipt of the notice of resignation from the Director shall: Frequently Asked Questions on The Companies Act, 2013 18 (i) take the same on record; (ii) intimate the ROC in Form DIR-12 within 30 days; and (iii) place the fact of such resignation in the Boards Report laid in the immediately following general meeting of the company. Q62: How long will the director be liable for the offences occurred during his tenure A62: The director shall be liable for the acts / transactions occurred during his tenure even after resignation and disassociation with the company. Q63: Who are KMPs and whether their appointment requires additional compliance A63: KMP has been defined under Section 2(51) of the CA, 2013, to mean: Chief Executive Officer or Managing Director or Manager; Company Secretary; Whole Time Director; Chief Financial Officer The following companies, are required to appoint KMP and their appointment shall be intimated to the ROC in Form DIR 12 and the return of their appointment shall be filed in Form MR 1: Listed company; Public company having paid up share capital of INR 10 crores or more Provided that as per Rule 8A of the Companies(Appointment and Remuneration Managerial Personnel), Rules, 2014, a company other than those mentioned above needs to appoint a whole time Company Secretary if its paid-up share capital is rupees five crore or above. Also, after the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, MR-1 is not required to be filed for Chief Executive Officer, Company Secretary and Chief Financial Officer w.e.f. 30.06.2016. Q64: Can a director be removed from the Company Directors 19 A64: Yes, shareholders of the Company may by passing an ordinary resolution in general meeting remove a director, but after giving a reasonable opportunity of being heard pursuant to Section 169 of the CA, 2013. A special notice would be required for passing such resolution. Once shareholders remove a director from the Board, the Board of Directors cannot reappoint him.