Appointment of Directors under Companies Act 2013 - Section 152

Appointment of Directors under Companies Act 2013 - Section 152

Generally, in a public company or a private company subsidiary of a public company, two-thirds of the total numbers of Directors are appointed by the shareholders and the remaining one-third’s appointment is made as per Articles and failing which, shareholders shall appoint the remaining one-third.

In a private company, which is not a subsidiary of a public company, the Articles can prescribe the manner of appointment of any or all the Directors. In case the Articles are silent, the Directors must be appointed by the shareholders.

Any company which wants to follow the principle of Proportional representation, the Companies Act also permits the Articles to provide for the appointment of two-thirds of the Directors accordingly.

Nominee Directors can be appointed by a third party or by the Central Government in the event of oppression or mismanagement.

General provisions relating to appointment of directors

1. Every director should be appointed by the company in general meeting as per the provision of the Act.

2. Director Identification Number is compulsory for appointment of director of a company.

3. Every person proposed to be appointed as a director shall furnish his Director Identification Number and a declaration that he is not disqualified to become a director under the Act.

4. A person appointed as a director should give his consent to hold the office of director in physical form on or before his appointment i.e., Consent to act as a director of a company.

5. Company should file Form with the Registrar of Companies mentioning particulars of appointment of directors and Key Managerial Persons along with the Consent form signed by Directors, as an attachment within 30 days of the appointment of a director with necessary fee.

6. Articles of the Company may provide the provisions relating to retirement of the all directors. If such provision relating to retirement are not made in the articles. Provision in the Act will be applicable.

First Director

“First directors” mean those directors who hold office from the date of incorporation of the company. The first directors are usually named in the articles of association or are appointed by the directors.

In the case of a One Person Company, an individual being a member shall be deemed to be its first director until the director(s) are duly appointed by the member in accordance with the provisions of Section 152.