How Are Directors Appointed During Company Incorporation?

Before you can start a business in India, there are certain pre-requisite that you need to meet up with. One such mandate for an online private limited company registration is that it must have at least 2 directors and subscribers. Hence, the appointment of directors is one of the most important aspects for the incorporation of a company. On a positive note, the Directors and Shareholders can be the same persons. 

The concept of appointment of first directors

The two or more individuals that are appointed as Directors of a company during the company registration process are the ‘First Directors’ of a company. It is mandatory for a company to complete the appointment of directors before the incorporation process. If there are no directors appointed during the registration, then the subscribers of the memorandum of association automatically become the first directors of the company. 

Eligibility to become a first director

To become the first director of any company in India, you need to fulfill the following criteria: 

• Must be an individual of a sound mind;
• A solvent individual is needed for appointment as Director;
• At least one of the two directors must be Indian resident; 
• He/she must be above the age of majority; and
• They must be free from any legal convictions.

Also read: Who can be a company director in India?

How to conduct the appointment of Directors? 

Before the introduction of SPICe+ form for company incorporation, it was mandatory for the [persons desirous of appointment as Directors to have a DIN. However, now, it is not mandatory for all directors to have DIN before the registration process is over. They can directly opt for the DIN through the spice+ form. So, for the purpose of appointment of directors all you need to do is submit the relevant information in the prescribed format along with the necessary documents. 

Documents required for appointment of Directors

You need to have the following documents in handy for appointment of directors in a company: 

• PAN card (mandatory for all Indian National Directors;
• ID Proof (passport, voter’s ID, driving license or Aadhar card); 
• Address proof (bank statement or latest utility bill); and
• Contact number and Email ID.

Key Note: For all Non Indian Resident Directors, it is mandatory to get the documents apostilled before MCA submissions. 

Can there be a change in the appointment of Directors post-incorporation?

Once a company commences business, there might be situations where the company wants to change its Directors. This can happen in the following two circumstances: 

• Removal of a Director; or 
• Resignation by a Director.

The change in appointment of a Director in a company happens after the company gives a valid reason for the removal of the Director, or the Director himself gives his resignation letter.  Thereafter, you can appoint a new director by the process of addition of a company Director.

However, you must note that even while changing the appointment of Directors of a company, the company must have at all times at least 2 Directors, in case of a pvt ltd. However, in case of a public company there must be at least 3 Directors appointed at all times after incorporation. 

Conclusion

The process of appointment of Directors is very important and integral to the business commencement as a company. The reason being the fact that a company is a legal person and hence, needs a legal representative to act on its behalf. You can read about the benefits of a company as a legal person in the article “The Boon of perpetuity and Separate Legal Existence”. Hence, the appointment of company directors is a very important part of the company registration.