How to Appoint Director in a Company?

How to Appoint Director in a Company?. The appointment of directors forms the basis of corporate governance, as directors are the natural persons through whom a company, being an artificial legal entity, functions and makes decisions. Under the Companies Act, 2013, specific provisions govern the eligibility, number, and manner of appointment of directors to ensure accountability, transparency, and effective management. A public company must have at least three directors, a private company at least two, and a One Person Company at least one, while the maximum strength of the board is capped at fifteen unless increased by a special resolution. Further, in the case of public companies, not less than two-thirds of the board must comprise directors appointed in a general meeting, and one-third of them are subject to retirement by rotation at each Annual General Meeting(AGM), thereby enabling both continuity and periodic change in leadership. The appointment process, whether by shareholders or the board, must adhere strictly to statutory requirements, making it a important compliance aspect for every company.
Who is the director of company?
A director is a natural person appointed by the shareholders to the Board of Directors for the purpose of managing and supervising the affairs of the company in accordance with its Memorandum of Association (MOA) and Articles of Association (AOA). Since a company is an artificial legal entity and cannot act on its own, it functions through its directors, who are entrusted with decision-making, policy formulation, and ensuring statutory compliance.
Under Section 2(34) of the Companies Act, 2013, a director is defined as “a director appointed to the Board of a company.” This statutory definition is not exhaustive and corresponds to Section 2(13) of the Companies Act, 1956, which defined a director as “any person occupying the position of director by whatever name called.”
In practice, directors are elected representatives of shareholders, responsible for protecting their interests and ensuring efficient management of the company. To be eligible for appointment, an individual must possess a Digital Signature Certificate (DSC) and a Director Identification Number (DIN), and must have attained the age of 21 years. While a private company is required to have a minimum of two directors at all times, the Companies Act, 2013 permits a maximum of fifteen directors on the board, unless increased through a special resolution.
Types of Directors under the Companies Act, 2013
The Companies Act, 2013 provides for different types of directors, each serving a unique role in ensuring that a company functions in accordance with law, corporate governance standards, and shareholder expectations.
Residential Director
 As per the Act, it is mandatory for every company to appoint at least one residential director who has stayed in India for not less than 182 days in the previous calendar year. This provision ensures that at least one member of the board is physically present in India to oversee compliance and decision-making in the interest of smooth operations.
Independent Director
 Independent directors are non-executive directors who do not have any material or pecuniary relationship with the company that might compromise their judgment. Their primary role is to improve corporate credibility and ensure higher governance standards by offering unbiased and professional perspectives. An independent director can hold office for five consecutive years, subject to reappointment by special resolution. Every listed public company must have at least one-third of its board as independent directors. In addition, certain unlisted public companies are also required to appoint a minimum of two independent directors if they meet thresholds such as having a paid-up share capital of Rs.10 crore or more, a turnover of Rs.100 crore or more, or outstanding loans, deposits, and debentures amounting to Rs.50 crore or more.
Small Shareholders’ Director
 To safeguard the interests of small shareholders, the Act allows listed companies to appoint a director representing them. Such a director can be elected if at least 1,000 small shareholders or 10% of the total number of small shareholders, whichever is lower, submit a notice demanding such an appointment. This provision ensures that even minority investors have a voice in company management.
Women Director
 In order to promote gender diversity on corporate boards, the Act mandates the appointment of at least one woman director in certain classes of companies. This requirement applies to all listed companies and to public companies with either a paid-up share capital of Rs.100 crore or more, or a turnover of Rs.300 crore or more. The inclusion of women directors is aimed at encouraging balanced decision-making and fostering inclusive corporate governance.
Additional Director
 A company’s board has the power to appoint additional directors who can hold office until the next Annual General Meeting (AGM). In case the AGM is not held, the term of such an additional director automatically concludes on the date on which the AGM should have been conducted. This provision gives flexibility to companies in appointing directors to meet immediate business requirements.
Learn more about Additional Directors.
Alternate Director
 An alternate director is appointed by the board to act in place of another director who is absent from India for a period of not less than three months. The alternate director holds office during the absence of the original director, ensuring that the board’s functioning does not get disrupted due to prolonged absence of any of its members.
Nominee Director
 Nominee directors are appointed by certain stakeholders such as specific classes of shareholders, banks, financial institutions, or even the Government in cases involving oppression or mismanagement. Their role is usually to represent the interests of the entity or authority that nominated them, thereby ensuring oversight and protection of financial or governance interests.
Executive Director
 An executive director is a whole-time working director of the company who is directly involved in managing the day-to-day operations of the business. Owing to their full-time engagement, they carry higher responsibilities towards the company and are expected to act diligently, carefully, and in the best interest of the company at all times.
Non-Executive Director
 Unlike executive directors, non-executive directors are not engaged in the day-to-day functioning of the company. However, they play a vital role in governance by contributing to policy-making, offering independent judgment, and challenging executive decisions when necessary to ensure that the company acts in the best interest of its stakeholders.
Managing Director
 A managing director is a director who has been entrusted with substantial powers of management by virtue of the company’s articles of association, an agreement with the company, or through a resolution passed either in a general meeting or by the board of directors. The managing director plays a pivotal role as the chief executive authority of the company and is primarily responsible for implementing policies, supervising operations, and ensuring growth and compliance.
Reasons for Appointment or Change of Directors
The composition of a company’s board is dynamic and may change over time depending on business needs, governance requirements, or statutory obligations. The Companies Act, 2013 prescribes the minimum number of directors for different classes of companies, but beyond legal compliance, several practical considerations often necessitate the appointment or replacement of directors. The major reasons are discussed below.
Induction of Fresh Talent and Expertise
As companies grow, diversify, or face new business challenges, the board may require additional skills or experience. Appointing directors with specialized knowledge or industry expertise helps strengthen decision-making and enables the company to address complex issues more effectively.
Preservation of Ownership and Control
Appointing new directors allows shareholders to delegate additional managerial and operational responsibilities without altering the company’s shareholding structure. This ensures that the day-to-day affairs are effectively managed while the strategic control continues to remain with the shareholders.
Inefficiency or Unavailability of Existing Directors
Sometimes, changes in directorship are necessitated by the inability of existing directors to perform their duties. Reasons may include inefficiency, health concerns, family responsibilities, retirement, or other personal circumstances. In such cases, the company must appoint new directors to ensure uninterrupted governance and smooth functioning.
Compliance with Statutory Requirements
The Companies Act, 2013 mandates that every private company must have at least two directors, every public company at least three, and every One Person Company at least one director. Situations such as the resignation, retirement, or sudden demise of a director may reduce the board strength below the statutory minimum. In such circumstances, immediate appointment of new directors becomes mandatory to restore compliance.
Process of Appointment of Directors in a Company
The appointment of directors is a important aspect of corporate governance, as directors are entrusted with the responsibility of managing the affairs of a company. The process is governed primarily by the provisions of the Companies Act, 2013, along with the company’s Articles of Association (AOA), and in some cases, by SEBI regulations for listed entities. The steps involved in the appointment or addition of a director are outlined below.
Review of Articles of Association (AOA)
Before appointing a director, the company must first examine its AOA to ensure that it contains provisions authorising the appointment or addition of directors. If no such clause exists, the AOA must be amended by passing a special resolution to enable director appointments in accordance with the law.
Board Resolution and General Meeting
Appointments of directors are ordinarily made in a general meeting of shareholders, either at the Annual General Meeting (AGM) or, if necessary, through an Extraordinary General Meeting (EGM). Where an EGM is required, the board must first convene a meeting to pass a resolution for holding the EGM, and thereafter, the shareholders must approve the appointment of the director. The resolution passed must be filed with the Registrar of Companies (ROC) in Form MGT-14 within 30 days.
Application for DIN and DSC
A person proposed to be appointed as a director must obtain a Digital Signature Certificate (DSC) and a Director Identification Number (DIN) if they do not already possess them. Once obtained, the proposed director is required to furnish their DIN along with a declaration confirming that they are not disqualified from being appointed as a director under the provisions of the Companies Act, 2013.
Consent to Act as Director (Form DIR-2)
The proposed individual must provide their consent to act as a director by submitting Form DIR-2 to the company. This written consent is mandatory, and no person can be appointed as a director without it.
Formal Appointment and Letter of Appointment
Upon obtaining the necessary approvals and consents, the company issues a Letter of Appointment to the new director, setting out the terms of appointment, responsibilities, and remuneration, if applicable. This formalises the individual’s role as part of the company’s board.
Filing with the Registrar of Companies (ROC)
After the appointment is finalised, the company must file Form DIR-12 with the ROC within 30 days of the appointment, along with the director’s consent (Form DIR-2). This filing ensures that the appointment is duly recorded in the public records maintained by the ROC.
Updating Company Records
The company is required to update its Register of Directors and Key Managerial Personnel with the particulars of the newly appointed director. Additionally, in the case of listed public companies, disclosures must also be made to the Stock Exchange within 24 hours of the conclusion of the meeting, and the details must be published on the company’s website within two working days in accordance with the SEBI (LODR) Regulations, 2015.
Updating Tax and Regulatory Records
Finally, the company must ensure that the details of the newly appointed director are updated with the GST Network and other relevant tax authorities to maintain compliance with taxation and regulatory requirements.
Final Word
The process of appointing directors is not merely an administrative requirement but a statutory obligation that ensures sound management and compliance within a company. By following the provisions of the Companies Act, 2013 and the company’s Articles of Association, businesses can ensure that only qualified individuals assume directorial roles. Every stage, from obtaining shareholder approval to filing necessary forms with the Registrar of Companies, reflects the emphasis on accountability and transparency in corporate governance. Ultimately, the appointment of directors safeguards the continuity of business operations, strengthens investor confidence, and promotes the long-term stability of the company.
Frequently asked Questions
Q1. Who has the authority to appoint directors in a company?
Ans. Directors can be appointed either by the shareholders at a General Meeting (AGM/EGM), by the Board of Directors in certain cases, or by the Central Government/Tribunal in specific situations as per the Companies Act, 2013.
Q2. What is the minimum number of directors required in a company?
Ans. Private Limited Company: Minimum 2 directors

Public Limited Company: Minimum 3 directors

One Person Company (OPC): Minimum 1 director
 The maximum limit is 15 directors, unless increased by passing a special resolution.

Q3. Is Director Identification Number (DIN) mandatory for appointment?
 Ans. Yes. No individual can be appointed as a director without obtaining a valid DIN issued by the Ministry of Corporate Affairs (MCA).
Q4. What forms are required to be filed with the ROC for appointment of a director?
 Ans. The company must file Form DIR-2 (consent of the director) and Form DIR-12 (particulars of appointment) with the Registrar of Companies within 30 days of the appointment.
Q5. Can a person be appointed as a director without his/her consent?
 Ans. No. The consent of the person to act as a director (in Form DIR-2) is mandatory before such appointment.
Q6. Can additional directors be appointed by the Board without shareholder approval?
 Ans. Yes. If authorized by the Articles of Association (AOA), the Board may appoint an Additional Director who shall hold office until the next Annual General Meeting (AGM).
Q7. What happens if a company fails to appoint the minimum required directors?
 Ans. Failure to maintain the statutory minimum number of directors may result in non-compliance with the Companies Act, 2013 and attract penalties from the Registrar of Companies.
Q8. Can a foreign national be appointed as a director in an Indian company?
 Ans. Yes. A foreign national or Non-Resident Indian (NRI) can be appointed as a director in an Indian company, provided they have a valid DIN and fulfill eligibility criteria under the Act.
Q9. Is shareholder approval always necessary for appointment of directors?
 Ans. In most cases, yes. Appointment of directors generally requires approval by shareholders at a General Meeting. However, in certain cases (like appointment of additional directors or nominee directors), the Board itself may appoint subject to authorization in the AOA.
Q10. Can a person who is disqualified under Section 164 of the Companies Act be appointed as a director?
 Ans. No. A person disqualified under Section 164 (for reasons like insolvency, conviction, or failure to file financial statements) cannot be appointed as a director in any company.

The appointment of directors forms the basis of corporate governance, as directors are the natural persons through whom a company, being an artificial legal entity, functions and makes decisions. Under the Companies Act, 2013, specific provisions govern the eligibility, number, and manner of appointment of directors to ensure accountability, transparency, and effective management. A public company must have at least three directors, a private company at least two, and a One Person Company at least one, while the maximum strength of the board is capped at fifteen unless increased by a special resolution. Further, in the case of public companies, not less than two-thirds of the board must comprise directors appointed in a general meeting, and one-third of them are subject to retirement by rotation at each Annual General Meeting(AGM), thereby enabling both continuity and periodic change in leadership. The appointment process, whether by shareholders or the board, must adhere strictly to statutory requirements, making it a important compliance aspect for every company.

Who is the director of company?

A director is a natural person appointed by the shareholders to the Board of Directors for the purpose of managing and supervising the affairs of the company in accordance with its Memorandum of Association (MOA) and Articles of Association (AOA). Since a company is an artificial legal entity and cannot act on its own, it functions through its directors, who are entrusted with decision-making, policy formulation, and ensuring statutory compliance.

Under Section 2(34) of the Companies Act, 2013, a director is defined as “a director appointed to the Board of a company.” This statutory definition is not exhaustive and corresponds to Section 2(13) of the Companies Act, 1956, which defined a director as “any person occupying the position of director by whatever name called.”

In practice, directors are elected representatives of shareholders, responsible for protecting their interests and ensuring efficient management of the company. To be eligible for appointment, an individual must possess a Digital Signature Certificate (DSC) and a Director Identification Number (DIN), and must have attained the age of 21 years. While a private company is required to have a minimum of two directors at all times, the Companies Act, 2013 permits a maximum of fifteen directors on the board, unless increased through a special resolution.

Types of Directors under the Companies Act, 2013

The Companies Act, 2013 provides for different types of directors, each serving a unique role in ensuring that a company functions in accordance with law, corporate governance standards, and shareholder expectations.

Residential Director

As per the Act, it is mandatory for every company to appoint at least one residential director who has stayed in India for not less than 182 days in the previous calendar year. This provision ensures that at least one member of the board is physically present in India to oversee compliance and decision-making in the interest of smooth operations.

Independent Director

Independent directors are non-executive directors who do not have any material or pecuniary relationship with the company that might compromise their judgment. Their primary role is to improve corporate credibility and ensure higher governance standards by offering unbiased and professional perspectives. An independent director can hold office for five consecutive years, subject to reappointment by special resolution. Every listed public company must have at least one-third of its board as independent directors. In addition, certain unlisted public companies are also required to appoint a minimum of two independent directors if they meet thresholds such as having a paid-up share capital of Rs.10 crore or more, a turnover of Rs.100 crore or more, or outstanding loans, deposits, and debentures amounting to Rs.50 crore or more.

Small Shareholders’ Director

To safeguard the interests of small shareholders, the Act allows listed companies to appoint a director representing them. Such a director can be elected if at least 1,000 small shareholders or 10% of the total number of small shareholders, whichever is lower, submit a notice demanding such an appointment. This provision ensures that even minority investors have a voice in company management.

Women Director

In order to promote gender diversity on corporate boards, the Act mandates the appointment of at least one woman director in certain classes of companies. This requirement applies to all listed companies and to public companies with either a paid-up share capital of Rs.100 crore or more, or a turnover of Rs.300 crore or more. The inclusion of women directors is aimed at encouraging balanced decision-making and fostering inclusive corporate governance.

Additional Director

A company’s board has the power to appoint additional directors who can hold office until the next Annual General Meeting (AGM). In case the AGM is not held, the term of such an additional director automatically concludes on the date on which the AGM should have been conducted. This provision gives flexibility to companies in appointing directors to meet immediate business requirements.

Learn more about Additional Directors.

Alternate Director

An alternate director is appointed by the board to act in place of another director who is absent from India for a period of not less than three months. The alternate director holds office during the absence of the original director, ensuring that the board’s functioning does not get disrupted due to prolonged absence of any of its members.

Nominee Director

Nominee directors are appointed by certain stakeholders such as specific classes of shareholders, banks, financial institutions, or even the Government in cases involving oppression or mismanagement. Their role is usually to represent the interests of the entity or authority that nominated them, thereby ensuring oversight and protection of financial or governance interests.

Executive Director

An executive director is a whole-time working director of the company who is directly involved in managing the day-to-day operations of the business. Owing to their full-time engagement, they carry higher responsibilities towards the company and are expected to act diligently, carefully, and in the best interest of the company at all times.

Non-Executive Director

Unlike executive directors, non-executive directors are not engaged in the day-to-day functioning of the company. However, they play a vital role in governance by contributing to policy-making, offering independent judgment, and challenging executive decisions when necessary to ensure that the company acts in the best interest of its stakeholders.

Managing Director

A managing director is a director who has been entrusted with substantial powers of management by virtue of the company’s articles of association, an agreement with the company, or through a resolution passed either in a general meeting or by the board of directors. The managing director plays a pivotal role as the chief executive authority of the company and is primarily responsible for implementing policies, supervising operations, and ensuring growth and compliance.

Reasons for Appointment or Change of Directors

The composition of a company’s board is dynamic and may change over time depending on business needs, governance requirements, or statutory obligations. The Companies Act, 2013 prescribes the minimum number of directors for different classes of companies, but beyond legal compliance, several practical considerations often necessitate the appointment or replacement of directors. The major reasons are discussed below.

Induction of Fresh Talent and Expertise

As companies grow, diversify, or face new business challenges, the board may require additional skills or experience. Appointing directors with specialized knowledge or industry expertise helps strengthen decision-making and enables the company to address complex issues more effectively.

Preservation of Ownership and Control

Appointing new directors allows shareholders to delegate additional managerial and operational responsibilities without altering the company’s shareholding structure. This ensures that the day-to-day affairs are effectively managed while the strategic control continues to remain with the shareholders.

Inefficiency or Unavailability of Existing Directors

Sometimes, changes in directorship are necessitated by the inability of existing directors to perform their duties. Reasons may include inefficiency, health concerns, family responsibilities, retirement, or other personal circumstances. In such cases, the company must appoint new directors to ensure uninterrupted governance and smooth functioning.

Compliance with Statutory Requirements

The Companies Act, 2013 mandates that every private company must have at least two directors, every public company at least three, and every One Person Company at least one director. Situations such as the resignation, retirement, or sudden demise of a director may reduce the board strength below the statutory minimum. In such circumstances, immediate appointment of new directors becomes mandatory to restore compliance.

Process of Appointment of Directors in a Company

The appointment of directors is a important aspect of corporate governance, as directors are entrusted with the responsibility of managing the affairs of a company. The process is governed primarily by the provisions of the Companies Act, 2013, along with the company’s Articles of Association (AOA), and in some cases, by SEBI regulations for listed entities. The steps involved in the appointment or addition of a director are outlined below.

Review of Articles of Association (AOA)

Before appointing a director, the company must first examine its AOA to ensure that it contains provisions authorising the appointment or addition of directors. If no such clause exists, the AOA must be amended by passing a special resolution to enable director appointments in accordance with the law.

Board Resolution and General Meeting

Appointments of directors are ordinarily made in a general meeting of shareholders, either at the Annual General Meeting (AGM) or, if necessary, through an Extraordinary General Meeting (EGM). Where an EGM is required, the board must first convene a meeting to pass a resolution for holding the EGM, and thereafter, the shareholders must approve the appointment of the director. The resolution passed must be filed with the Registrar of Companies (ROC) in Form MGT-14 within 30 days.

Application for DIN and DSC

A person proposed to be appointed as a director must obtain a Digital Signature Certificate (DSC) and a Director Identification Number (DIN) if they do not already possess them. Once obtained, the proposed director is required to furnish their DIN along with a declaration confirming that they are not disqualified from being appointed as a director under the provisions of the Companies Act, 2013.

Consent to Act as Director (Form DIR-2)

The proposed individual must provide their consent to act as a director by submitting Form DIR-2 to the company. This written consent is mandatory, and no person can be appointed as a director without it.

Formal Appointment and Letter of Appointment

Upon obtaining the necessary approvals and consents, the company issues a Letter of Appointment to the new director, setting out the terms of appointment, responsibilities, and remuneration, if applicable. This formalises the individual’s role as part of the company’s board.

Filing with the Registrar of Companies (ROC)

After the appointment is finalised, the company must file Form DIR-12 with the ROC within 30 days of the appointment, along with the director’s consent (Form DIR-2). This filing ensures that the appointment is duly recorded in the public records maintained by the ROC.

Updating Company Records

The company is required to update its Register of Directors and Key Managerial Personnel with the particulars of the newly appointed director. Additionally, in the case of listed public companies, disclosures must also be made to the Stock Exchange within 24 hours of the conclusion of the meeting, and the details must be published on the company’s website within two working days in accordance with the SEBI (LODR) Regulations, 2015.

Updating Tax and Regulatory Records

Finally, the company must ensure that the details of the newly appointed director are updated with the GST Network and other relevant tax authorities to maintain compliance with taxation and regulatory requirements.

Final Word

The process of appointing directors is not merely an administrative requirement but a statutory obligation that ensures sound management and compliance within a company. By following the provisions of the Companies Act, 2013 and the company’s Articles of Association, businesses can ensure that only qualified individuals assume directorial roles. Every stage, from obtaining shareholder approval to filing necessary forms with the Registrar of Companies, reflects the emphasis on accountability and transparency in corporate governance. Ultimately, the appointment of directors safeguards the continuity of business operations, strengthens investor confidence, and promotes the long-term stability of the company.

Frequently asked Questions

Q1. Who has the authority to appoint directors in a company?

Ans. Directors can be appointed either by the shareholders at a General Meeting (AGM/EGM), by the Board of Directors in certain cases, or by the Central Government/Tribunal in specific situations as per the Companies Act, 2013.

Q2. What is the minimum number of directors required in a company?

Ans. Private Limited Company: Minimum 2 directors

Public Limited Company: Minimum 3 directors
One Person Company (OPC): Minimum 1 director

The maximum limit is 15 directors, unless increased by passing a special resolution.

Q3. Is Director Identification Number (DIN) mandatory for appointment?

Ans. Yes. No individual can be appointed as a director without obtaining a valid DIN issued by the Ministry of Corporate Affairs (MCA).

Q4. What forms are required to be filed with the ROC for appointment of a director?

Ans. The company must file Form DIR-2 (consent of the director) and Form DIR-12 (particulars of appointment) with the Registrar of Companies within 30 days of the appointment.

Q5. Can a person be appointed as a director without his/her consent?

Ans. No. The consent of the person to act as a director (in Form DIR-2) is mandatory before such appointment.

Q6. Can additional directors be appointed by the Board without shareholder approval?

Ans. Yes. If authorized by the Articles of Association (AOA), the Board may appoint an Additional Director who shall hold office until the next Annual General Meeting (AGM).

Q7. What happens if a company fails to appoint the minimum required directors?

Ans. Failure to maintain the statutory minimum number of directors may result in non-compliance with the Companies Act, 2013 and attract penalties from the Registrar of Companies.

Q8. Can a foreign national be appointed as a director in an Indian company?

Ans. Yes. A foreign national or Non-Resident Indian (NRI) can be appointed as a director in an Indian company, provided they have a valid DIN and fulfill eligibility criteria under the Act.

Q9. Is shareholder approval always necessary for appointment of directors?

Ans. In most cases, yes. Appointment of directors generally requires approval by shareholders at a General Meeting. However, in certain cases (like appointment of additional directors or nominee directors), the Board itself may appoint subject to authorization in the AOA.

Q10. Can a person who is disqualified under Section 164 of the Companies Act be appointed as a director?

Ans. No. A person disqualified under Section 164 (for reasons like insolvency, conviction, or failure to file financial statements) cannot be appointed as a director in any company.