Chapter 1: Appointment and Qualifications of Directors (Companies Act, 2013)

CA – Corporate & Economic Laws | Quick Revision Notes

1. Introduction

Director [Section 2(34)]

A director is a person appointed to the Board of a company.

Board of Directors [Section 2(10)]

The Board of Directors means the collective body of directors managing the affairs of the company.

Legal Position of Directors

A director acts as:

Agent → Represents the company in contracts.
Trustee → Holds company property in a fiduciary capacity.
Officer → Responsible for statutory compliances.

2. Board of Directors (Section 149)

Minimum Number of Directors

Company	Minimum Directors
Public Company	3
Private Company	2
One Person Company	1

Maximum Number

15 Directors

More than 15 directors can be appointed only by passing a Special Resolution.

3. Woman Director

Mandatory in:

Every Listed Company
Every Public Company having:
- Paid-up Share Capital ≥ ₹100 Crore, OR
- Turnover ≥ ₹300 Crore

Newly Incorporated Company

Must appoint within 6 months.

Casual Vacancy

Fill by:

Next Board Meeting OR
Within 3 months

Whichever is later.

4. Resident Director

Every company must have at least one director who stays in India for 182 days or more during the financial year.

For newly incorporated companies, this requirement applies proportionately.

5. Independent Director

Required only for prescribed public companies.

Purpose:

Better Corporate Governance
Protect shareholders
Independent decision-making

Independent Directors:

Are Non-Executive Directors
Do not retire by rotation
Must satisfy independence criteria.

6. Executive vs Non-Executive Director

Executive Director

Responsible for daily management.

Examples:

Managing Director
Whole-Time Director

Non-Executive Director

Participates only in policy decisions.

Examples:

Independent Director
Nominee Director

7. Appointment of Directors (Section 152)

First Directors

If Articles contain names → Those persons become first directors.

If Articles do not contain names →

Subscribers to Memorandum become first directors.

For OPC →

Member becomes first director.

8. Appointment of Subsequent Directors

Normally appointed by:

General Meeting

Exceptions:

Board can appoint:

Additional Director
Alternate Director
Casual Vacancy Director

(if Articles permit)

9. Requirements for Appointment

Before appointment:

✔ DIN

✔ Declaration of non-disqualification

✔ Written Consent (DIR-2)

Company files:

DIR-12

within 30 days.

10. Retirement by Rotation

Applicable to:

Public Company
Private subsidiary of Public Company

Not applicable to ordinary private companies.

Rule

At least 2/3 of total directors

must be

Rotational Directors

Remaining 1/3

Non-Rotational Directors.

11. Directors Retiring at AGM

Every AGM:

1/3 of Rotational Directors retire

They may be:

Reappointed
Replaced
Office left vacant

12. Directors NOT counted for Rotation

Do NOT include:

Independent Directors
Nominee Directors

while calculating rotational directors.

13. Deemed Re-appointment

If:

Vacancy not filled
Meeting adjourned
No resolution against reappointment

Then retiring director is deemed reappointed.

Not applicable if:

Resolution lost
Director unwilling
Director disqualified
Special resolution required
Section 162 violated.

14. Director Identification Number (DIN)

Every director must possess DIN.

Only one DIN allowed throughout life.

DIN is also valid as DPIN under LLP Act.

15. Important Forms

Form	Purpose
DIR-2	Consent
DIR-3	Apply DIN
DIR-3A	No surname declaration
DIR-3B	Intimation by Director
DIR-3C	Company informs ROC
DIR-5	Surrender DIN
DIR-6	Change in DIN details
DIR-12	Appointment filing

16. DIN Time Limits

Application →

DIR-3

↓

Government allots DIN

↓

Within 1 Month

↓

Director informs Company

↓

Within 1 Month

↓

Company informs ROC

↓

Within 15 Days

Memory Trick

Minimum Directors

Public = 3

Private = 2

OPC = 1

👉 “3-2-1 Rule”

Woman Director

Remember:

Listed OR 100/300

(₹100 Cr Capital OR ₹300 Cr Turnover)

Resident Director

182 Days

Think:

Half-year stay in India.

Rotation