Appointment of Director
Director of a company is a person elected by the shareholders for managing the affairs of the company as per the Memorandum of Association and Articles of Association of the company. Since a company is an artificial judicial person created by law, it can only act through the agency of natural persons. Thus, only living persons can be Directors of a company and the management of a company is entrusted to the Board of Directors. Appointment of Directors can be required for a company from time to time based on the requirements of the shareholders of the business.
To appoint a director, the person proposing to become a Director must obtain a digital signature certificate (DSC) and director identification number (DIN). DIN can be obtained for any person who is above the age of 18. The nationality or residency status of the DIN applicant does not matters. Hence, Indian Nationals, Non-Resident Indians and Foreign Nationals can obtain DIN and be appointed as Director of a company in India.
Meaning of Director in Private Limited Company
Companies Act,2013 defines the term “Director” as someone appointment to the Board of a company. The Board of Directors means a group of those individuals elected by the shareholders of a company to manage the affairs of the company. Since a company is an artificial legal person created by law, it is necessary to act only through the agency of natural persons. It can only act through human beings, and it is the Directors through whom mainly the company acts. Therefore, the management of a company is entrusted to a body of persons called “Board of Directors”.
Another definition of a Director is someone who administers, controls or directs something, especially a member of a commercial company; one who supervises, controls or manages; a person elected by the shareholders of a company to direct company’s policies; person appointed or elected according to law, authorised to manage and direct the affairs of a company.
Becoming Director in Private Limited Company
For a person to become a Director in Private Limited Company, he/she requires a Director Identification Number (DIN Number). DIN Number can be obtained for any person over the age of 18 by applying to the DIN Cell. IndiaFilings Learning Center provides more information about the procedure for obtaining DIN in India.
Maximum and Minimum Number of Directors in Private Limited Company
Only an Individual (living person) can be appointed as a Director in a Company. A body corporate or business entity cannot be appointed as a Director in a Company. A company can have a maximum of fifteen Directors – it can be increased further by passing a special resolution.
Minimum Number of Director in Company are as follows:
- Private Limited Company – Minimum two Directors in case of Private Limited Company
- Limited Company – Minimum three Directors in case of Limited Company.
- One Person Company – Minimum one Director in case of One Person Company.
Director in Private Limited Company – Residency Requirement
There is nothing in the Companies Act, 2013 that prohibits the appointment of any person who is a foreigner or NRI as a Director of a Company. However, Section 149(3) provides that every company shall have at least one Director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.
Women Director Requirement in Company
Listed companies and limited companies having a paid-up share capital of Rs.100 crore rupees or more or turnover of Rs.300 crores or more are required to appoint at least one woman Director. There is no women Director requirement for a private limited company.