Appointment and Qualification of Directors

1.1 Meaning of Director and Board of Directors

Director means a director appointed to the Board of a company. (i.e. if a person exercises the powers of a director
but is not designated as a director, he shall not be regarded as director.)
Note – As per Sec 149(1), only an individual can be a director.

Board of Directors, in relation to a company, means the collective body of the directors of the company.
Note – Directors can exercise powers only when they act collectively. An individual director has no authority to
act on behalf of the company, unless he is so authorized by the Act, articles, a resolution of the Board of Directors
or a resolution of the members.

1.2 Disqualifications of Directors [Sec 164]

Sec 164(1) – Ground for Disqualification

c - applied to be adjudged as
a - Declared unsound by a
b - undischarged insolvent insolvent and his application is
competent court
pending

f - failed to pay call on

d - convicted by court of any offence (whether involving shares of the company
moral turpitude or under the Compaies Act, 2013/ 1956) and e - Order of held by him & 6 months
sentenced to an imprisonment of 6 months or more court or have elapsed from the
tribunal due date for payment of
Disqualification for a period of 5 years from date of expiry disqualifying call
of sentence him
If imprisonment is for 7 years or more - Lifetime disqualify * Disqualify even if
shares are jointly held

g - convicted of offense dealing

with Related Party i - violated provisions of Sec 165(1)
h - does not hold DIN (Maximum permissible
Transactions u/s 188 at any time directorships)
during preceding 5 years

Sec 164(2) – Disqualification by reason of default made by a company

A person who is or has been a director of a company shall be disqualified from being

reappointed as a director or appointed in any other

of that company for a period of 5 years company
from date of default

If the company in which he is or has been a director has

or (b) failed to
(a) failed to file
Financial Statements repay deposits/ debentures pay declared
OR Annual Returns for or interest thereon dividend
any continuous period and such failure
of 3 financial years continues for 1
year or more

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Important points
i. Where a person is appointed as director of a company which has committed a default specified under Sec
164(2), he shall not incur disqualification for a period of 6 months from the date of his appointment.
ii. Even if default made good by the company, the directors who got disqualified by reason of sec 164(2) shall
continue to be disqualified.
iii. The report of the auditor shall state as to whether any director is disqualified u/s 164(2) [Sec 143(3)].
iv. Sec 164(2) shall not be applicable to government company, not defaulted in filing annual financial statement
and annual returns.

Sec 164(3) – Articles of a private company (not public company) may provide for additional grounds for
disqualification of a director.

1.3 Vacation of Office by Directors [Sec 167]

Sec 167(1) – Grounds of vacation of office of a director

• Where he incurs a disqualification specified in sec 164
• Where he absents himself from all the Board Meetings held during a period of 12 months (It is irrespective
whether leave of absence was granted to him or not. However, if such non attendance is involuntary, such as
due to temporary physical disability by reason of an accident, it shall not be grounds for vacation.)
• Where he acts in contravention of or fails to disclose his interest required under Sec 184
• Where he is removed in pursuance of the provisions of the Act
• Where he, having being appointed a director by virtue of his holding any office or employment in the
holding, susidiary or associate company, ceases to hold such office or other employment in that company

Reading postponement of vacation of office (Section 167) with Section 164

The clauses (d) & (e) of sec 164(1) shall apply to disqualify the director and NO postponement shall apply to
disqualification. However, postponement of vacation of office shall be there in the following cases:
i. For first 30 days (unconditional postponement)
ii. If appeal is filed within such 30 days, then until expiry of 7 days from the date of disposal of such
appeal
iii. If further appeal is filed within such 7 days, then until the date of disposal of such further appeal

Reading Sec 164(2) with Sec 167

In case a company makes a default specified in section 164(2), all the directors of such defaulting company shall
be disqualified for appointment or reappointment as director for a period of 5 years.
As per section 167, if a director if a director who becomes disqualified under section 164(2), is also a director in
any other company, then,
i. his office of director in all such other companies shall become vacant
ii. his office of director in defaulting company shall not become vacant

Vacation of office is automatic

Director ceases to be a director on happening of any of the events specified under section 167. No opportunity of
being heard is required to be given to the director. The Board is neither required to pass a resolution nor does it
have any power to waive any ground for vacation of office.

Consequences of vacation of office of all the directors [Section 167(3)]

In such case, appointment of requisite number of directors shall be made by the Promotors of the company. In
his absence, by the Central Govt. All such directors hold office till directors are appointed by the company in the
General Meeting.

Sec 167(4) – Articles of a private company (not public company) may provide for additional grounds for vacation
of office of a director.

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1.4 Types of Director

Type Appointing Authority Tenure Other Points
First a. The names of the first directors Until directors a. If all subscribers are body
Director shall be generally specified in the are duly corporates (in case of point c),
[Sec 152(1)] Articles at the time of appointed by then the company shall have no
incorporation of the company. the company first directors.
b. If Articles are silent, but Table F is as per b. In case of OPC, the individual,
applicable, then the first directors provisions of being the sole member, shall be
shall be determined in writing by the Act. deemed to be first director of the
majority of subscribers the company till the director(s) are
memorandum. duly appointed by the member as
c. Otherwise, all subscribers to the per the provisions of the Act.
memorandum who are individuals
shall be deemed as first directors.
Additional Board of Directors by majority, Upto the next a. Resolution by Circulation is
Director subject to: AGM allowed.
[Sec 161(1)] a. Articles must authorize (Table F If AGM not b. An additional director may be
authorizes). If articles do not allow, held upto last executive or non-executive.
members must pass special due date, then c. He has same rights and duties as
resolution to alter articles to term expires any other director.
authorize Board; only then will it on such due d. Additional director is “not a
be possible. Mere ordinary date and such retiring director”. Thus, his
resolution shall not suffice. additional appointment as a regular director
b. The person so to be appointed has director shall requires compliance of sec 160.
not failed to be appointed in a vacate his e. Such can be appointed in GM,
general meeting. office. only if deadlock in the Board.
Alternate This section allows the Board to When original a. A person cannot be an alternate
Director appoint an alternate director in place director director for more than one
[Sec 161(2)] of a director (i.e. original director) returns back director of the same company.
during his absence from India for a to India b. An already existing director
period of 3 months or more. cannot be an alternate for any
However, if other director in the same co.
The Board can only appoint alternate the original c. A person can be alternate for an
director if it is authorized by: director independent director only if he
a) the Articles OR returns to also meets the criteria for
b) Ordinary resolution at a general India independence as per 149(6).
meeting temporarily d. The provisions of automatic
in a manner reappointment u/s 152(7) apply
Note – Members or original director such that he to the original director only.
cannot appoint alternate director. would not be e. Sec 184 disclosures shall apply
Only Board of Directors can. able to when the alternate director
transact himself is interested. The
business, then original director’s interest is not
the alternate relevant.
director shall f. Resolution by Circulation is
continue. allowed.
g. He has same rights and duties as
An alternate any other director and is not an
director shall agent or proxy of the original
not hold a term director in any manner.
longer than h. Alternate director is “not a
that of the retiring director”. Thus, his
original appointment as a regular director
director. requires compliance of sec 160.

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Type Appointing Authority Tenure Other Points

Nominee Subject to the Articles of the
Director company, the Board may
[Sec 161(3)] appoint any person as director
nominated by any institution in
pursuance of the provisions of - -
any law or any agreement or by
the CG/ SG by virtue of its
shareholding in a government
company.
Casual If articles specify the manner to Upto the date a. Resolution by Circulation is not
Vacancy fill in the casual vacancy, such which the allowed. A resolution is required to be
Director should be followed. director in passed in the board meeting.
[Sec 161(4)] whose place b. A casual vacancy can only be filled if
However, if the articles are he is appointment of such director was
silent, then such should be filled appointed made in a General Meeting.
by the Board. Approval shall be would have c. Casual vacancy may be due to death,
required by the members in the held office resignation, removal, disqualification
immediately next general had it not etc. i.e. all reasons other than
meeting. been vacated retirement or expiry of tenure.
d. If a director does not assume office, no
[Applicable to both Private & casual vacancy can arise.
Public companies] e. It is not obligatory to fill the vacancy.
The Board can resolve to keep it
unfilled.
f. Casual vacancy director is “not a
retiring director”. Thus, his
appointment as a regular director
requires compliance with sec 160.

1.5 Small Shareholder Director – SSD [Sec 151]

Small Shareholders of a company may appoint a SSD by giving a notice in writing.

Holding shares of nominal value Notice at office of the company at least Applicability
of not more than Rs. 20,000 14 days before the meeting Every Listed Company

SSD shall be consider as an Notice shall be signed by at least 1000 Listed Company may
independent director if he meets small shareholders OR 1/10th of the decide to appoint SSD
criteria & gives such declaration. total number of shareholders, voluntarily also.
whichever is lower

Tenure of SSD: • SSD should not be associated with the company in any
a) Not liable to Rotation capacity, directly or indirectly for 3 years from the date he
b) Maximum tenure of 3 consecutive years ceases to hold office as an SSD.
c) Cannot be reappointed • SSD can be removed by Ordinary resolution as per Sec
169.

1.6 Appointment of Director by Proportional Representation [Sec 163]

• If the articles provide for appoint of directors by proportional representation, then not less than 2/3rd of the
total number of directors shall be appointed by proportional representation.
• The tenure of such directors shall be for 3 years. No rotation of directors. Directors cannot be removed by
merely following Sec 169. In fact, Sec 163 overrides the entire Companies Act, 2013.
• Method of voting – Single transferrable vote, cumulative voting or any other mode

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1.7 Rotation of Directors [Sec 152(6)] & Automatic Reappointment [Sec 152(7)]
Sec 152(6) – Rotation of Directors
“Unless the articles provide for the retirement of all directors at every annual general meeting, not less than two-
third of the total number of directors of a public company shall –
i. Be persons whose period of office is liable to determination by retirement of directors by rotations;
and
ii. Save as otherwise expressly provided in this Act, be appointed by the company in general meeting.”

At least 2/3rd (round UP) of total number of For counting of total number of directors, the
directors shall be rotational directors. following shall be excluded:
However, the articles of the company may • Independent directors
require a higher number.
• Nominee directors appointed by a financial
institution established under a separate Act of
Of the rotational directors, 1/3rd (round OFF) the Parliament and containing provisions
shall retire at each AGM. overriding the Companies Act, 2013.
The director liable to retire by rotation shall be
those who have been longest in the office. In
case, two or more directors were appointed on While directors like additional directors,
the same day, then the directors liable to retire alternate directors or casual vacancy
shall be determined as per any agreement directors are not considered as retiring director
between them or by lots, in absence in any for purpose of rotation, they are still counted for
agreement. ‘Total number of directors’.

Important Points
i. Where a company does not hold AGM upto the last due date, the directors liable to retire at the AGM
shall have to vacate their offices on the last date AGM ought to have been held. [B.R. Kundra v Motion
Pictures Association (1976)].
ii. The provisions of rotation of directors do not apply to a private company, if it has not committed any
default in filing with the Registrar its financial statements or annual return

Sec 152(7) – Automatic reappointment of retiring director

At the Annual General Meeting, there are 3 options

Appoint another director in Resolve to keep the position

Reappoint the retiring director
place of retiring director vacant

If the position of the retiring director has not been filled up at the AGM and the meeting has not resolved not to
fill the vacancy, the AGM shall adjourn to the same place, same time, next week (if that day is national
holiday, then to the next succeeding day which is not a holiday).

If at the adjourned meeting also, the vacancy in place of the retiring director has not been filled up at the AGM
and the meeting has not resolved not to fill the vacancy, the retiring director shall be deemed to be reappointed.

However, a retiring director shall not be deemed to be reappointed in the following cases:
i. Where a resolution for the reappointment of such director was put and lost
ii. Where appointment of such director was made in contravention of sec 162
iii. Where the retiring director has in writing, expressed his unwillingness to be reappointed
iv. Where the retiring director is disqualified or not qualified for appointment

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1.8 Right of persons other than retiring director to stand for directorship [Sec 160]
‘Retiring director’ means a director retiring by rotation.

Duty of the company to inform its members

Requirements of Notice The company shall inform its members about the
candidature of the person proposed as a director at
Person eligible to give • The notice shall be given least 7 days before the general meeting by:
notice for directorship at least 14 day before the
general meeting at the i. serving individual notices to the members
• Any person registered office of the co. through electronic mode to such members who
(whether or not he is have provided their email addresses to the
a member of the • The notice shall be signed. company for communication purposes, and in
company) may give • A sum of Rs. 1 lakh or writing to all other members (The company shall
a notice of his own such higher amount as may not require to serve such individual notices if the
candidature be prescribed, shall be company advertises the candidature of the
deposited along with the proposed director at least 7 days before the
• A member may general meeting in at least one vernacular
give a notice of notice
newspaper in the principal vernacular language
candidature of and at least one English newspaper circulating in
himself or any the district in which the registered office of the
other person company is situated) AND
ii. by placing such notice on the website of the
company, if any

Refund of Deposit
The amount deposited with the company shall be refunded, if the person proposed as director –
i. Gets elected as a director (i.e. if an ordinary resolution is passed for his appointment); or
ii. Gets more than 25% of total valid votes cast (where or a show of hands or on a poll)

In a section 8 company, even where a person fails to secure more than 25% of valid votes, the Board of Directors
may decide to refund the deposit made of such person.

No requirement of deposit in certain cases

a) In case of appointment of an independent director
b) In case of a director recommended by the Nomination and Remuneration Committee or by the Board
of Directors, in the case of a company not required to constitute the Nomination and Remuneration
Committee

Important points
i. Articles cannot take statutory right given under section 160.
ii. Appointment of director in contravention of sec 160 shall render such appointment invalid.
iii. Sec 160 shall not apply to a private company, if it has not committed any default in filing with the Registrar
its financial statements or annual return.

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1.9 Removal of director [Section 169]

The company shall An ordinary

Special notice to be send such special resolution shall
given by member notice to the director need to be passed
[holding 1% total concerned forthwith. at the general
voting power or meeting to
The director can make The company
paid up share remove the
a written shall send
capital of Rs 5 director.
representation and intimation of
lakhs, whichever is
request company to such notice Any other person
lower] to the
circulate to the along with may be appointed
company not earlier
members. If it is not written as director in his
than 3 months but
circulated, he may representation place if special
at least 14 days
require it to be read at least 7 days notice for
before the general
out at the meeting. But before the appointing such
meeting.
if it is for needless general was given.
No reason for publicity or meeting. Otherwise, it
removal of director defamation, Tribunal shall be a case of
needs to be given may exempt such reqt. a casual vacancy.
by the member.
[LIC vs Escorts The director also has The director so
Ltd] right to be heard at removed cannot
the meeting. be reappointed.

Director that cannot be removed under section 169:

a. Independent Director reappointed for a second term [Require special resolution & reasonable
opportunity of being heard]
b. Directors appointed by the tribunal under section 242
c. Directors appointed by proportional representation
d. Nominee director appointed by any financial institution constituted under a special Act of the Parliament,
it the provisions contained in the special Act restrain removal of such nominee directors by the member

1.10 Resignation of director [Section 168]

Notice in writing to company The resignation to take effect on date specified in the notice (if any) or
(not 3rd party) date of receipt by the company, whichever is later

Director may forward within 30 days to the Company to intimate within 30 days to the Registrar
Registrar - a copy of the resignation along with (DIR 12). Also post it on website (if any) and
detailed reasons (DIR 11) include in Board Report to be laid in next GM.

No acceptance of resignation of director is required by the company, whether executive or non-executive.

Liability for past acts to continue despite resignation.

1.11 Number of Directors [Sec149(1)]

Minimum Number of Directors in a
a. Public Company – 3
b. Private Company – 2
c. One Person Company (OPC) – 1
A company may, by its articles, provide a higher number as the minimum strength of the Board of directors.
However, if the articles provide a number lower that the statutory minimum number of directors, such a provision
shall be void, and of no legal effect.

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Maximum number of directors – 15

i. If the company wants to appoint more than 15 directors, it can do so after passing a special resolution.
ii. A company may in its Articles provide that the maximum number of directors shall be less than 15.
In such case, any increase in the number of directors beyond the number specified in the articles, shall
require alteration of the articles through a special resolution by complying with the provisions
contained in Section 14.
iii. Exemption to Sec 8 Co. which have not committed a default in filing FS + AR or Govt. Co. which
have not committed a default in filing FS + AR

1. 12 Maximum Number of Directorships [Sec 165]

• Maximum limit for All Cos. – 20
• Maximum limit for Public Cos. – 10 (A public company shall for the purpose of this section shall include
a private company which is either a holding company or a subsidiary company of a public company)

Important points
i. For reckoning the limit of directorship, the following directorships shall be excluded:
a. Section 8 company (if such company has not committed any default in filing with the Registrar
its financial statements or annual return) OR
b. Dormant company
ii. The members of a company may, by special resolution, specify any lesser number of companies in
which the director of the company may act as a director.
iii. A person cannot be a Small Shareholder Director in more than 2 companies at the same time. It
shall need to be ensured that the second company in which he is appointed as a SSD shall not be in a
business which is competing or is in conflict with the business of the first company. [Sec 151]

1.13 One Woman Director [Second Proviso to Sec 149(1)]

The following classes of companies have been prescribed to have at least one woman director:

Listed Companies Every other Public Company having

Paid Up SC ≥ Rs. 100 crores OR Turnover ≥ Rs. 300 crores

For this purpose, the paid up share capital or turnover shall be as on the last date of latest audited financial
statements. These companies shall comply with the provisions within 6 months from the date of incorporation.

Casual Vacancy
Any vacancy in the office of one woman director shall be filled by the board at the earliest but not later than –
a. Next board meeting or
b. 3 months from the date of such vacancy, whichever is later
Where a company has two or more woman directors, an vacancy arises in the office of one or more woman director
such that at least one woman director continues to be in office, the company may decide not to fill such vacancy,
and in case the company decides to fill such vacancy, such may be filled up by appointing a woman director or a
person other than woman director.
However, if there is only one woman director and the vacancy arises in the office of such woman director,
the company shall have to fill such vacancy by appointing woman director only.

1.14 Resident Director [Section 149(3)]

Every company shall have at least one director who stays in India for a period of at least 182 days during the
financial year.
In case of newly incorporated company, this requirement shall apply proportionately at the end of the
financial year in which the company is incorporated.

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1. 15 Independent Directors [Section 149]

Number of Independent Directors

Listed Public Company Public Company having

At least 1/3rd of total PSC Turnover

number of directors or Loans, debentures & or
(Rounded up) ≥ 10 crores deposits > 50 crores ≥ 100 crores

At least 2 independent directors

If company ceases to fulfill all the 3 criteria for a continuous period

of 3 years, then it shall not be required to appoint any independent
director until such time as it meets any of the 3 criteria.

Exemption: The following classes of unlisted public companies shall not be required to have any independent
director:
• Joint Venture • Wholly Owned Subsidiary • Dormant Company
Also, the provisions for independent directors are not applicable to Sec 8 Co. & Specified IFSC Public Co.

Term of office:
1st term – of maximum 5 consecutive years
2nd term – may be reappointed for 5 consecutive years, if a special resolution is passed and disclosure of such
appointment is made in the Board report
An independent director re-appointed for a second term can only by removed by passing a special resolution
& after giving him reasonable opportunity of being heard.

Cooling period: No indpendent director shall hold office for more than 2 consecutive terms (less than 5 years
shall consitute a term as well). After such, he shall need to serve a minimum cooling period of 3 years to be
eleigible for being appinted again. In such cooling period, he cannot be appointed or associated with the company
in any capacity.

Filing up casual vacancy: At the earliest, but not later than – Immediately next board meeting or 3 months,
whichever is later

Declaration: Every independent director shall give a declaration that he meets the criteria of independence at –
First board meeting, First board meeting in every financial year, and whenever there is any change in the
circumstances which may affect his status as an independent director.

Remuneration: No stock options may be given to independent directors. He may be given remuneration by way
of sitting fees. Also, he may be paid profit linked commission as approved by the members.

Exemption from liability: Liability shall only arise in respect of acts which occurred with his knowledge,
attributable through Board process, and with his consent or connivance or where he had not acted diligently.

Higher number of Independent directors may be required depending on the requisite composition of the Audit
committee or the Nomination & Remuneration committee.

Independent directors are required to abide by the provisions of Schedule IV which contains guidelines of
professional conduct, role and functions, duties, manner of appointment etc for independent directors.

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1.16 Director Identification Number (DIN) [Sec 152(3) and Sec 153 to Sec 159]
DIN means an identification number allotted by Central Government to any individual, intending to be appointed
as director or to any existing director of a company, for the purpose of his identification as a director of a company.

Application
Every applicant, who intends to be appointed as director of an existing company shall make an application
electronically in Form DIR-3 to the Central Government along with specified fees.
(In case of a new company, if proposed directors do not have DIN, the particulars of maximum 3 directors
shall be mentioned in Form No. INC-32 (SPICe) and DIN may be allotted to maximum 3 proposed directors
through such form.)

The applicant shall download Form DIR-3 from the portal, fill in the required particular sought there in, verify
and sign the Form and after the attaching copies of the following documents, scan and file the entire set of
documents electronically –
i. Photograph
ii. Proof of identity
iii. Proof of residence
iv. Board resolution proposing his appointment as director in an existing company
v. Specimen signature duly verified

Form DIR-3 shall be signed and submitted electronically by the applicant using his own Digital Signature
Certificate and shall be verified by a CS in full time employment of the company or the managing director or
director or CEO or CFO of the company in which the applicant is intended to be appointed as director in an
existing company.

Note – In case the name of a person does have a last name, then his or her father’s or Grandfather’s surname
shall be mentioned in the last name along with the declaration in Form DIR-3A.

On the submission of the Form DIR-3 on the portal and payment of fees, an application number shall be
generated.

After generation of application number, the Central Government shall process the applications received and
decide on the approval or rejection thereof.

In case of Approval In case of Defective or incomplete application

The CG shall The CG shall give intimation of such defect or incompleteness, by placing it on the
communicate to the website and by email, directing the applicant to rectify such by resubmitting the
applicant along with application within a period of 15 days.
the DIN allotted
within a period of 1 If the defects are partially rectified If the defects are not removed within the
month from the or the information given is still given time
receipt of such found to be defective CG shall treat and label such application as
application. CG shall reject the application invalid in the electronic record

CG shall then inform the applicant either by way of letter by post or electronically
or in any other mode. The fee so paid with the application shall neither be refunded
nor adjusted with any other application.

Intimation
Applicant director Company in which to be director Registrar or any other
Intimate DIN within 1 Intimate DIN within 15 days from officer or authority as may
month from receipt of DIN receipt from director be specified by the CG
Form – DIR 3B Form – DIR 3C

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Cancellation or Surrender or Deactivation of DIN

The Central Government or Regional Director (Northern Region), Noida or any officer authorised by the Regional
Director may cancel or deactivate the DIN in the following cases –
a. Duplicate DIN – If a person has two DINs, the data of both shall be merged
b. DIN was obtained in a wrongful manner or by fraudulent means (Opportunity of being heard shall be given)
c. Death of the individual
d. Declared as a person of unsound mind by a competent Court
e. Adjudicated as insolvent
f. Surrender of DIN (DIR 5) – Application by the DIN holder to surrender DIN along with declaration that
he has never been appointed as director in any company and the said DIN has never been used for filing of
any document with any authority

Intimation of Changes in Particulars

Every individual who has been allotted a DIN shall in case of any change in his particulars as stated in Form
DIR-3, intimate such changes to the Central Government within a period of 30 days of such changes in Form
DIR-6. The form shall be digitally signed by a CA in practice or a CS in practice or a cost accountant in practice.

The Central Government, upon The DIN cell of the Ministry shall intimate The concerned individual
being satisfied after the changes to the concerned Registrar(s) shall intimate the change to
verification, shall incorporate under whose jurisdiction the registered the company or companies in
the changes and inform the office of the company(s) in which such which he is a director within
applicant. individual is a director is situated. 15 days of such change.

Directors KYC
Every individual who holds DIN as at 31st March of any financial year shall, submit e-form DIR-3-KYC to the
Central Government on or before 30th September of immediately next financial year. (14th October 2019 for
the financial year ending 31st March, 2019.)
The Central Government or Regional Director (Northern Region) or any officer authorized such shall
deactivate the DIN of an individual who does not intimate his particulars in DIR-3-KYC within stipulated time.
The de-activated DIN shall be re-activated only after e-form DIR-3-KYC is filed along with fee as prescribed.
Now, DIR-3-KYC-WEB can also be filed after the first time instead, if no changes are to be made.

Important points
• It is mandatory for every director to have a DIN (Director Identification Number) as per sec 154 or such other
number as maybe prescribed under section 153.
• No individual who has already been allotted a DIN shall apply or obtain or possess another DIN.
• If any return, information or particulars required to be furnished relates to a director or contains any reference
to a director, every person or company shall mention the DIN in such.
• DIN includes Designated Partner Identification No. issued under the Limited Liability Partnership Act, 2008.
• The Director Identification Number so allotted under these rules is valid for the life-time of the applicant and
shall not be allotted to any other person.

1. 17 Appointment of Directors to be Voted Individually [Sec 162]

Every director must be appointed by passing a separate resolution. Two or more persons cannot be appointed as
directors by a single resolution.
However, if two or more persons are to be appointed as directors by a single resolution, the following procedure
shall need to be followed:
a. A unanimous resolution shall need to be passed in the general meeting to authorise appointment of two
or more persons to be appointed as directors by a single resolution.
b. An ordinary resolution shall need to be passed for appointed such directors.

• If appointment of directors is made in contravention of section 162, then such appointments shall be void
(irrespective whether any objection was raised towards it in a general meeting or not).
• The acts of the directors shall be valid until the defect in appointment is noticed by the company [Sec 176].
• The provisions of automatic reappointment shall not apply [Sec 152(7)].
• Sec 162 only applies to resolutions to be passed in a general meeting.

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1. 18 Duties of directors [Sec 166]

a. Duty to act as per articles of the company
b. Duty to act in good faith to promote the objects of the company for the benefit of its members as a whole,
and in the best interests of the company, its employees, the shareholders, the community and for the
protection of environment
c. Duty to exercise due care skill and diligence and shall exercise independent judgment
d. Duty to avoid conflict of interest with company
e. Duty not to make any undue gain (Otherwise liable to pay to the company an amount equal to that gain)
f. Duty not to assign his office (Any assignment of office made by director shall be void.)
g. Prohibition of assignment of office - No director shall assign his office to any other person. Any
assignment of office made by a director shall be void.

1. 19 Register of Directors & KMP and their shareholding [Sec 170 & 171]
• Various particulars with respect to every director & KMP along with details of securities held by them shall
be maintained in such Register.
• Any appointment or change shall be intimated to the Registrar within 30 days in DIR-12.
• It shall be kept at the Registered Office of the company and be open for inspection by members during
business hours. It shall be also kept open for inspection at every AGM by anyone attending the AGM.
• A member has the right to take extract from and copies of such Register. On request made by member, it
shall be provided, free of cost, within 30 days.
• If inspection is refused or copies not sent within 30 days, the Registrar shall on application, order immediate
inspection or supply of copies.
• The provisions for inspection and supply of copies do not apply to Government company, in which entire
paid up share capital is held by Central Government and/or State Government(s) provided they have not
defaulted in filing to the registrar its financial statements and annual returns.

1. 20 Consent to act as Director [Sec 152(5)]

A person appointed as a director shall not act as a director, unless he gives his consent to hold office as a director
with the company (DIR 2, on or before appointment) and such consent has been filed by the company with the
ROC (DIR 12, within 30 days of his appointment).

1. 21 Directors of company required to file e-form ACTIVE [INC 22A]

Every Company incorporated on or before the 31st December, 2017 shall file the particulars of the Company and
its registered office, in ACTIVE on or before 25.04.2019.

If a company fails to file the e-form ACTIVE within specified period, the DIN of its existing directors shall be
marked as “Director of ACTIVE non-compliant company”. Only after the filing is done, then the DIN of such
director shall be marked as “Director of ACTIVE compliant company

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