Provisions of Appointment of Director
Appointment of First Director:
The regulations for the appointment of the first director of a corporation are usually presented in their Article of Association. However, if such a provision is absent, the following people would be considered the first directors of the corporation:
i) The individual in the case of One Person Company;
ii) In the remaining cases: the individuals who are subscribers to the memorandum.
Such presumed initial director/s can hold the position until the director/s are duly assigned by the members. The company should appoint every director in a general meeting of its members.
Requirement of DIN:
Individuals who want to be appointed as a director in any company should have a Director Identification Number (DIN). DIN is allotted by the Central Government within one month after applying for the post. Before the actual appointment as a director of a company the selected individual should provide a declaration that s/he isn’t disqualified for the post of director along with DIN
Consent and ROC:
The appointed individual should give consent in writing in Form DIR-2 to hold office as a director before starting as a director in the company. The consent should be filed with the registrar in Form DIR-12 by the company within 30 days from the date of appointment of the director. However, if the individual is appointed as an independent director in the general meeting, an explanatory statement should be annexed to the notice of the GM that according to the Board, he is capable of becoming an independent director.
Retirement by Rotation
The article of association(AoA) of a public company should provide rules for the retirement of all directors at every Annual General Meeting (AGM) of the company. At least, not less than 2/3rd of the total number of directors of a Public Company should be the individuals whose tenure is to be determined by the retirement of directors by rotation and be appointed in general meetings by the company.
The ‘retiring director’ means a director retiring by rotation.
The remaining directors should also be appointed by such public companies in GM subject to any regulations in the AoA of that company. Here, the total number of directors doesn’t include independent directors. Moreover, this section does not apply to the appointment of independent directors.
In the first AGM of a public company held after the GM in which the first directors are appointed and at every subsequent AGM, 1/3 of such directors should retire by rotation for the time being, or if their number isn’t three or it’s multiple, then, the nearest number to one-third will retire from office.
For Example: If a company has 12 directors then a) the directors who should retire by rotation would be 12*2/3 i.e. 8, and b) No. of directors who will retire are 8*1/3 i.e. 2.33 or nearest to one-third is 2.
The directors with the longest tenure should retire by rotation at AGM. However, individuals who became directors on the same day should retire as per the agreement among themselves, or else it will be decided by a lot. However, the company should fill up such vacancies at the AGM where the director retires by appointing a retiring director or some other individual thereto.
Re-appointment of Director
If the position of the retiring director is vacant and the meeting wasn’t expressly able to fill the vacancy, the meeting will stand adjourned till the same day, at the same time and place in the next week, or if that day is a national holiday, till the next working day, at the same place and time.
If at the next adjourned meeting also, the position remains vacant and that meeting also wasn’t expressly able to fill the vacancy, the retiring director will be re-appointed at the vacant post in the adjourned meeting. However, the retiring director wouldn’t be re-appointed in the adjourned meeting in the following five situations:
In case a resolution for the re-appointment of a retiring director has been put to the current or previous meeting and lost;
In case the retiring director expresses his unwillingness to be re-appointed by written notice;
In case the retiring director is disqualified or is not qualified for appointment as a director of the company;
In case a Special Resolution (SR) or an Ordinary Resolution (OR) is necessary for his appointment or reappointment; or
In case the individual was appointed with all individual votes in a general body meeting.
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