Additional Director

Additional Director

A new Director appointed by the Board of Directors of the Company to the Board is called as ‘Additional Director’.  Such a Director shall hold the office only up to the next annual general meeting of the company and shall continue to act as a director only if the shareholders pass a resolution in the next general meeting. 

An additional director is a director appointed by the Board of Directors in a board meeting. He shall hold office only up to the next annual general meeting.

It is necessary to note that, such an appointment can be made only if it’s authorized by the article and his proposal for appointment as a director was not rejected before, by the shareholders of the company in a general meeting. The additional director has all the powers, limits and obligation as of any other director of the company. They are also included in the maximum limit of directors that can be appointed by company under Section 149 of Companies Act, 2013.

Regularization of Additional Director

The Additional Director so appointed can continue to act as a director by passing a resolution in the General Meeting of the Company. This is known as ‘Regularization of Additional Director’.

The designation of “Additional Director” shall be changed to “Director” after the regularization upon filing an application with the registrar.

The term of additional director is till the upcoming Annual General Meeting (AGM). However, he can be regularized even before the AGM by passing a resolution in an extra ordinary general meeting.

If the resolution is not passed in the AGM or the AGM is not held even on the last day it should have been held, the director shall be terminated from his office immediately. Also, such a director cannot be appointed as an additional director by the Board in the future.

Additional Director & Director

There is no much difference between the additional director and any other director of the company. The key difference is that the Additional director is appointed by the Board whereas a director is appointed or regularized by the Shareholders in a general meeting,

Primary Requirements for appointment of Additional Director

1. Authorization is given in AOA: 

Check if the articles of association authorize the appointment of additional director by the board.

2. Eligibility for appointment: 

Check whether the proposed director has not failed to get appointed as a director by shareholders in general meeting before.

3. Qualified to be appointed: 

The director must not be disqualified to be appointed as director as per Companies Act, 2013.

4. Appointment is Within the Maximum Limit: 

Check if the proposed appointment is within the maximum limit of directors that can be appointed by the company.

5. Must have a Director Identification Number (DIN) : 

The director must have a valid DIN which is not deactivated due to non-filing of DIR-3 KYC.The directors also may apply for DIN by filing an application with the registrar after taking a Digital Signature Certificate (DSC)

Process of appointment of Additional Director

A. Director Identification Number (DIN):

1. If the Director already has a DIN: Check whether the DIN possessed by the Director is a valid one and is not deactivated due to non-filing of DIR-3 KYC.

2. If the Director already doesn’t have a DIN: If the existing director doesn’t have a DIN, he shall obtain a Digital Signature Certificate (DSC) and make an application for DIN in DIR-3 Form 

A separate board meeting is required to be conducted to propose the appointment of the director. The copy of board resolution from the company proposing him to appoint him as a director shall be attached with the application. 

The documents required are:

• Proof of Identity;
• Proof of Address;
• Photograph;
• Copy of board resolution proposing his appointment as a director

B. Obtain the Written Consent & Declaration from proposed director:

Obtain a written consent in Form DIR-2 that he is willing to act as a director and a Declaration in DIR-8 providing the name of the companies he has acted as a director in the past.

C. Call for Board Meeting to make the appointment:

Call a board meeting to pass the resolution approving the appointment of the additional director. Also, authorize a director to file the return of appointment with the Registrar of companies.

D. Notice of Appointment:

The Company shall send a notice of appointment to the director with effective date after passing the resolution in the board meeting. 

E. Filing of Return of appointment with Registrar of Companies (RoC):

File the Return of appointment in Form DIR-12 with Registrar within 30 days of appointment. Once the Form DIR-12 is filed with ROC, the details of new director shall be updated in the MCA portal against respective Company.