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Directors are often regarded as the brain of the company, serving as the key managerial personnel who oversee and manage the company’s operations. Changes in the board of directors occur through either the appointment of new directors or the resignation of existing ones. Such changes are undertaken to ensure that the board maintains an optimal mix of expertise to serve the company’s best interests.
The approval of a director’s resignation is the responsibility of the Board of Directors (BoD), while the appointment of directors requires the consent of the shareholders. Whether it involves appointment, removal, or resignation, these changes do not take effect immediately; official notification must be submitted to the Ministry of Corporate Affairs to formalize the update.
According to the law, only a natural person (an individual human being) can be appointed as a director of a company.
Age Criteria:
There is no fixed minimum age to become a director, but the individual must be legally competent to enter into contracts. For specific roles such as Managing Director, Full-time Director, or Independent Director in a recognized company, the person must be at least 21 years old and should not have exceeded 70 years of age.
Nationality Requirement:
There is no restriction on nationality for directors; however, the company must have at least one director who is an Indian citizen.
DIN Needed
To be eligible to be designated as a company’s director, the person must get a Director Identification Number. The main intention behind having a DIN is to make assured that fake directors do no fraud, and in case anyone ventures any such criminal activity, they can be traced within this unique number.
Limit Of Valid Directorship
A personality can only be a director of 20 separate companies at a time. Out of these 20 companies, only ten can be public companies.
A person is disqualified from being appointed as a director if they are of unsound mind, declared insolvent or bankrupt, have a serious criminal record, or are associated with overdue company returns or compliance defaults.
Any person who is declared of unsound mind by a competent court or is an undischarged insolvent cannot be appointed as a director. This includes children and individuals mentally incapable of making decisions independently, as well as anyone who has filed for adjudication as an insolvent and whose application is pending.
If an individual has been convicted for any offense and sentenced to imprisonment for at least six months, they are barred from becoming a director for five years after completion of the sentence. Those convicted and sentenced to imprisonment for seven years or more are permanently disqualified from being appointed as a director in any company.
An individual is disqualified if they were a director in a company that failed to file annual returns or financial statements for three continuous years. Similarly, if the company failed to repay deposits, pay interest, or redeem debentures for more than one year, the director loses eligibility for five years from the default date.
Managing Director: Responsible for overall company operations, strategy, and leadership, and reports to the board.
Executive Director: Directly manages department or business functions, implements board directives, and supervises employees.
Independent Director: No material or financial relationship with the company and brings objective judgment to governance, required for listed and some large companies.
Non-Executive Director: Offers strategic oversight and policy advice without participating in daily operations.
Whole-Time Director: Dedicates full working hours to company affairs and compliance, usually assigned to key business functions.
Women Director: Companies with paid-up capital of ₹100 crore or turnover of ₹300 crore must appoint at least one woman director within a year.
Public Company: Minimum 3 directors, maximum 15; more than 15 allowed by passing a special resolution (no government approval needed).
Private Company: Minimum 2 directors, maximum 15 (extendable with a special resolution).
One Person Company (OPC): Minimum and maximum of 1 director.
Women Directors Mandate: All listed and certain large companies must have at least one woman director within one year of applicability.
Independent Directors Mandate: Listed public companies must have at least one third of directors as independent; certain large unlisted public companies must have at least two.
An individual may hold directorships in up to 20 companies in total.
Of these, not more than 10 public companies (including holding or subsidiary companies).
If a person exceeds these limits prior to the Act’s commencement, they must choose their preferred companies within one year and inform both the companies and Registrar of Companies.
Appointment of Directors: Only natural persons (not companies or firms) can be appointed as directors to manage a company’s operations and bring it into legal existence.
Resignation of Directors: A director may resign by giving written notice to the company. The Board takes note of the resignation, and the company must notify the Registrar within 30 days and include details in the next director’s report.
Effective Date: The resignation becomes effective from the date the company receives the notice or the date specified in the notice, whichever is later.
Liability: A resigned director remains liable for offences committed during their tenure, even after the resignation takes effect
Passport-size Photograph
PAN Card
Proof of Residency
Digital Signature Certificate (DSC)
Identity Proof
Contact Information
Apostille Requirement
Resignation Notice
Proof of Dispatch
Acknowledgment
Appointment of First Directors During IncorporationAt the time of company incorporation with the Ministry of Corporate Affairs (MCA), the individuals proposed to act as directors are recognized as the first directors of the company. If no specific person is designated as a first director during incorporation, then the original subscribers to the Memorandum of Association (MOA) are automatically considered as the company’s first directors.
MCA has introduced a simplified process for appointing directors during the incorporation stage:
There is no prior requirement of having a Director Identification Number (DIN) before becoming a director at the time of incorporation.
DIN is allotted simultaneously during the company registration process.
The details of the nominated directors must be furnished in the incorporation e-forms as prescribed by MCA.
Upon successful incorporation, the director’s master data becomes accessible on the MCA portal.
The company must attach the necessary documents of all proposed directors at the time of filing incorporation forms.
In the integrated incorporation form (SPICe+), a maximum of three DINs can be applied for simultaneously.
If the proposed directors do not already have a DIN, then up to three individuals can be appointed as directors during incorporation through this facility.
In the case of a One Person Company (OPC), the sole member of the company is deemed to be its first director, until such time the member appoints a director(s) in accordance with the provisions of Section 152 of the Act.
The Companies Act, 2013 prescribes the minimum number of directors required for different types of companies:
Public Company – Minimum 3 directors
Private Company – Minimum 2 directors
One Person Company (OPC) – Minimum 1 director
A public company may appoint up to 15 directors. If it wishes to appoint more than 15, it may do so by passing a special resolution in a general meeting, and no prior approval of the Central Government is required.
No individual can hold office as a director in more than 20 companies at the same time.
Out of these, the number of directorships in public companies cannot exceed 10.
Any person holding directorships in excess of the specified limit as on the commencement of the Act must, within one year, resign from the excess companies and choose where to continue.
The Companies Act also mandates the appointment of at least one woman director in the following cases:
Every listed company.
Every other public company with:
Paid-up share capital of ₹100 crores or more, or
Annual turnover of ₹300 crores or more, as on the last date of the most recent audited financial statements.
Such companies must appoint a woman director within one year from the commencement of the applicable provisions.
A Managing Director is entrusted with substantial powers of management and is responsible for overseeing the overall operations of the company. They act as the principal executive authority and ensure the effective implementation of business policies and strategies.
Executive Directors are actively involved in the day-to-day management and administration of the company. They play a critical role in operational decision-making and are directly accountable for the company’s performance and growth.
Non-Executive Directors do not participate in the daily business operations or routine decision-making. Instead, they provide strategic guidance, expert opinions, and independent oversight to ensure the company is being managed in the best interest of its stakeholders.
Nominee Directors are appointed by financial institutions, investors, venture capitalists, or banks that have invested in or lent funds to the company. Their role is to safeguard and represent the specific interests of such stakeholders on the company’s board.
Independent Directors are appointed to ensure transparency, accountability, and good corporate governance. They are not associated with the company’s promoters or management and are expected to provide impartial judgment on board matters.
The appointment of directors in a company must comply with the provisions of the Companies Act, 2013, the Articles of Association (AOA), and relevant rules. The process can be divided into two stages:
As per Section 161(1) of the Companies Act, 2013, the appointment of a director must be authorized by the Articles of Association (AOA). If the AOA does not provide such authority, it must first be amended to include the provision for director appointments.
Collect all necessary documents and information required for the appointment process.
The proposed director must provide their consent to act as a director in Form DIR-2, which is a mandatory document before recommending any individual for directorship.
The following forms must be filed with the Registrar of Companies (ROC):
DIR-2 – Consent to act as director (signed by the appointee).
DIR-12 – Particulars of the appointment of directors.
DIR-8 – Intimation that the director is not disqualified under the Act.
The proposed appointment must be approved by the shareholders through a general meeting resolution, thereby regularizing the individual as a duly appointed director.
Convene a Board Meeting to consider the proposal for appointment.
Convene a General Meeting with proper notice in compliance with the Companies Act, 2013, and the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
Pass the necessary board and shareholder resolutions approving the appointment of the new director.
Issue a formal Letter of Appointment to the appointee.
File Form DIR-12 with the ROC within 30 days of the appointment.
Make required entries in the Register of Directors and Key Managerial Personnel maintained by the company.
Update the newly appointed director’s details in regulatory portals such as GSTN and other statutory registrations, if applicable.
Upon completion, the appointment will be reflected in the company’s records and made available on the MCA (Ministry of Corporate Affairs) portal.
Any director may resign from his or her office by submitting a written notice of resignation to the company. Upon receiving such notice, the Board of Directors is required to take note of the resignation, and the company must intimate the Registrar of Companies (ROC) in the prescribed manner, timeline, and form.
The details of the resignation must be included in the Board’s Report that is placed before the shareholders at the next general meeting.
The resigning director must also independently forward a copy of the resignation notice along with the reasons for resignation to the ROC within 30 days of the resignation.
The resignation becomes effective from the later of the following dates:
The date on which the company receives the resignation notice, or
The date specified by the director in the resignation notice.
A director who has resigned will continue to remain liable for any offenses, acts, or omissions committed during their tenure, even after resignation.
If all directors of a company resign simultaneously, the promoter of the company, or in their absence, the Central Government, will appoint the required number of directors. Such directors will hold office until fresh appointments are made by the shareholders in a general meeting.
Disputes within the Board
When multiple directors work together, differences of opinion may arise. If such conflicts hinder the company’s overall performance or decision-making, a director may prefer to resign to avoid further disputes.
Better Career Opportunities
Directors may resign if they receive a more promising career opportunity or a chance to pursue independent ventures. In many cases, directors might also be appointed to another company’s Board through its Articles of Association (AOA), making resignation a natural transition.
Mismanagement
If a director discovers illegal practices, mismanagement, or unethical activities within the company, they may choose to resign to protect themselves from personal liability and to disassociate from such actions.
Suspension or Violation of Duties
A director may be removed or may voluntarily resign if they face suspension, or are found responsible for non-compliance, violations, or defaults that could impact their credibility or legal standing.
Withdrawal of Nomination
This applies specifically to nominee directors appointed by investors, banks, or NBFCs. Once the transaction or investor’s purpose is fulfilled, the nominee director may resign, or their role may end following the withdrawal of nomination.
The Companies Act, 2013 lays down specific duties and procedures that must be followed by both the resigning director and the company when a director or managing director steps down from office.
The company must pass a Board Resolution acknowledging and approving the resignation submitted by the director.
As per Section 168(1) of the Companies Act, 2013, the director shall provide a written resignation notice or letter stating the reasons for resignation.
In accordance with Rule 16 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the company is required to:
File Form DIR-11 with the Registrar of Companies (ROC) within 30 days of the effective date of resignation.
Attach a copy of the resignation letter along with the reasons for resignation.
The company must also file Form DIR-12 to update the company’s records with the ROC reflecting the change in directorship.
The resignation and its details should be mentioned in the Board’s Report and placed before the shareholders at the next general meeting.
Before appointing a new director, certain basic conditions must be satisfied as per the Companies Act, 2013:
The proposed individual must be a major (18 years or above).
He or she must not be disqualified under the provisions of the Companies Act, 2013.
The appointment must receive the approval of the Board of Directors and/or shareholders, as applicable.
There is no minimum educational qualification requirement under the Act to become a director.