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PROCESS OF APPOINTMENTOF DIRECTOR ROC BACK OFFICE

by CS Divesh Goyal
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There is a confusion in the mind of the professionals that if all the directors of the company are disqualified,then “How to appoint new directors in the Company? And numerous additional questions also evolved into the mind like:

  • Who is having the authority to appoint the new Director?
  • As all the directors are disqualified, then whose DSC will be affixed on the form?
  • Which Section of the Companies Act, 2013 states about the same.
  • What isthe process for the appointment of the new Director?

In words, if all the directors of the company have been disqualified u/s 164 or vacant office due to any reasons, then there will be no director in the Company. However, as per the Companies Act, there is a limit of minimum no. of directors in the company. Therefore, Company has to appoint a new Director and the power for the appointment of Director in above situation is given underSection 167 of the Companies Act, 2013 (Extract is given below)

Where all the directors of a company vacate their offices under any of the disqualifications specified in sub-section (1), the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in the general meeting.”

Note: As per section 167(3) in the above mentioned situation “Promoters” shall appoint the required number of Directors.

Quick Bites:

  1. Who is Promoters under the Companies Act, 2013? 

“(69) “promoter” means a person—

(a) who has been named as such in a prospectus or is identified by the company in the annual return

 Referred to in section 92; or

(b) who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or

(c) In accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act:

Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity;”

STEP- I: Identify Promoters of THE Company

First Step in the process is to identify the promoters of the Company. As per the definition, generally the promoter can be identified from the following sources:

  • If name of such person is mentioned as the promoter in the Annual Return (i.e. MGT-7)
  • If as a shareholder or the director such person is having control over the Company.

[1]Note: In general, the shareholders of the Company are considered as the promoters as they are having control over the business of the Company.

STEP- II: Decide Person to be appointed as THE Directors of THE Company:

Promoters of the Company shall identify the person for the appointment as the Director. Promoters shall take the following documents/information from the selected person:

  • DIN of such Directors (DIN is mandatory to be appointed as the Director of the Company)
  • Consent of the directors being appointed through DIR-2
  • Intimation in respect of the disqualification through DIR-8
  • Interest in other entities in MBP-1
  • Identity proofs of the new directors
  • Affidavit from the new directors being appointed affirming that the name/s of the companies/LLPs in which they are directors and that they are not disqualified to act as Directors.

STEP- III: Calling of General Meeting:

After obtaining of above-mentioned documents, the company is required to hold a General Meeting for passing of the resolution u/s 152 for the appointment of the Directors. As all the directors of the company become disqualified,they can’t call EGM. Therefore, as per Section 100, the shareholder of the Company shall call the extra ordinary General Meeting.

  • They will send requisition for the same to the Directors and at the registered office of the Company. (as directors are already disqualified)
  • Shareholders (i.e. promoters) shall call for Extra Ordinary General Meeting 

Note: Process of calling and holding of the EGM shall be same as called and held by the Board of Directors. Like:

  • Sections 101, 102 etc sections shall be followed.
  • Secretarial Standard 2 shall be followed. Etc.

STEP- IV: Documents of EGM to be submittedwith the ROC:

After holding of an EGM and passing of the special resolution for the appointment of the new directors, The Promoters are required to prepare / maintain the below-mentioned documents:

  • Copy of the Notice issued to call the general meeting by the promoters
  • Proof of dispatch of the notice along with the names of the promoters/ shareholders and their shareholding with the copy of the share certificates.
  • Attendance sheet of the said EGM for the appointment of the new directors.
  • Minutes of said Meeting.

STEP- V: Other Documents required TO BE SUBMITTED with THE ROC:

  • Certificate from an Auditor that the new Directors being appointed are having valid DIN’s and are not disqualified due to any provisions under the Companies Act and are qualified to act as the Directors under the Companies Act.
  • Affidavits from all the disqualified directors citing the name of the Company due to which they were disqualified.
  • Filed copy of DIR-12.

STEP- VI: Submission of  the documents with the ROC:

Note: Documents required to be submitted with the ROC shall be in relation to the appointment of one Director only. Because, one director has been updated on MCA website by the ROC and the company can file DIR-12 of other director by using DSC of the director updated by the ROC.

Quick Bites:

  1. How to submit the documents with the ROC?

 There are two ways to submit the above-mentioned documents with the ROC.

  1. Submit the above-mentioned documents in the e-form GNL-1 with the DSC of the Professional.
  2. Submit the hard copy of the above-mentioned documents in physical with the ROC.

STEP- VII: Updating of name of Director by ROC:

ROC will check/verify all the above-mentioned documents. If the ROC satisfies with the documents, then it will update the name of the one director in its record and update the same on the MCA website.

STEP- VIII: Filing of e-form DIR-12 with the ROC:

After updating of the name of the above director, the company shall file DIR-12 for the appointment of the other director and use the DSC of the First Director.

List of the Documents required to be submitted with the ROC:

  1. Copy of the Notice issued to call the general meeting by the promoters.
  2. Proof of dispatch of the notice along with the names of the promoters/shareholders and their shareholding with the copies of the share certificates.
  3. Attendance sheet of the said EGM for the appointment of the new Directors .
  4. Consent of the Directors being appointed through DIR-2, intimation in respect of the disqualification through DIR-8 and interest in other entities in MBP-1, identity proofs of the new Director being appointed.
  5. Minutes of the said meeting
  6. Certificate from an Auditor that the new Directors being appointed are having valid DINs and are not disqualified due to any provision under Companies Act and are qualified to act as Directors under Companies Act.
  7. Affidavits from all the Disqualified directors citing the name of the Company due to which they were disqualified.
  8. Affidavits from new Directors being appointed affirming that the names of the companies/LLPs in which they are Directors and that they are not disqualified to act as Directors.

Also company should submit the covering letter specifying the case of the company clearly about facts  of the case proposing the name of one director to be updated through

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com). Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION

[1]The author preparing editorial keep shareholder as a promoter

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