Add Directors

Add Directors to The Company

It is well-known that the company's directors are its brains. They oversee, manage, and control every aspect of the company's operations. A new director is appointed, or an existing director is removed, to effect a change of directors. Experts acting in the company's best interest should always oversee the director transition process. Let us understand the process of appointing a director with Lawgical Adda!

Types of directors

Executive and director

A resolution adopted at a public meeting, the articles of incorporation of the company, a contract with the company, or the board of directors may all appoint a managing director as a director. The board of directors has broad authority to oversee the corporation's operations.

Full-time director or executive director

An executive director, sometimes known as a whole director, is a full-time employee of the company.

Director Often Selected

A non-voting member of the board of directors attends and takes part in the business presented before the board. These are part-time managers or directors.

An additional director

As long as they abide by the terms of the company's articles of association, everyone the Board of Directors appoints between the two annual general meetings is regarded as an additional director. The incoming annual general meeting of the firm shall be the sole term that the new directors serve. 

But a corporation's total number of directors plus new directors can only be the number of directors specified in the Articles of Association for the Board of Directors, at most.

The Board of Directors at the general meeting steps in for an initial director who has been absent for three months or longer.

Professional Director

 A professional director does not own any shares in the company, but they do have qualifications.  These seasoned directors are occasionally added to the team to offer their operational expertise.

Nominee director

Banks and private equity investors usually require their representative to be appointed to the board of the affected company in order to receive equity assistance. 

 These individuals are referred to as the Nominee Directors. A nominee director is a person designated by the only director of the firm to oversee OPC affairs in the case of the director's demise or incapacitation.

The highest and lowest number of directors in a private limited business

A private limited company cannot designate a corporate body of the business entity as a director. As a result, a company can only designate one director. Up to fifteen directors may be appointed to a private limited company; more directors may be added by adopting a special resolution.

Advantages Of Including Or Eliminating A Director

• Fresh talent in the Committee: The expansion of the business depends on the contributions of every department. A fresh director can infuse the company with creativity, specialism, and productive work ethics.
• No ownership requirement: Directors are in charge of day-to-day operations. There is no requirement for ownership and voting rights of shareholders with the appointment of a new director, as the director does not require subscribing to share capital.
• The insufficiency of current directors The company must ensure that its performance is not being negatively impacted by the insufficiency of its current directors. It is possible that a current director isn't functioning as well as they once did because of personal reasons or advanced age. Therefore, it is crucial to add or remove directors as needed.
• In order to meet legal requirements, a private limited corporation must have a minimum of two directors. Therefore, the number of directors cannot be lowered below the statutory limit in order to meet it.

Process for Designating Directors in a Company

Determine if a director is necessary.

Determining whether a new director is required is the first step. This could be the result of a resignation, retirement, or growth of the company's board of directors.

Determine possible applicants

Finding suitable candidates comes next, after it has been determined that a new director is needed. Professional networks, external recruitment firms, or internal hiring processes can all be used for this.

Exercise due diligence

After a shortlist of candidates has been created, it is crucial to investigate each one further. Verifying their credentials, background, and possible conflicts of interest should be part of this.

Provide a proposal to the board of directors.

The recommendation to the board of directors comes next after the completion of due diligence. After reviewing the suggestion, the board of directors will decide whether or not to name the director.

Pass a resolution at a general meeting of shareholders

At a general meeting of shareholders, a resolution appointing a director must be approved by the board of directors. A simple majority of the present and voting shareholders must approve this resolution.

Submit the required documentation to the Registrar of Companies (ROC)

Following the resolution's passage, the business needs to submit the required documentation to the ROC. The consent of the director to serve as a director and a statement attesting to their eligibility will be included in this paperwork.

Why is it necessary to switch directors?

Bring on board fresh talent

As a company expands, alliances and plans are formed, requiring the input of every department for efficient planning. A specialist to oversee the group can also be employed in a managerial role as the company's director in conjunction with the launch of a new department or product line. The company gains from specialisation and concentrated efforts as a result.

Assign operational duties without compromising ownership

The daily operations fall within the purview of the directors. The shareholders may designate directors to handle operational duties while maintaining strategic control by appointing a new director. Since a director in this case does not need to subscribe for share capital, the ownership and voting rights of shareholders do not diminish upon the appointment of a new director to the Board.

Incapacity of current directors to work

After a while, the current directors might not be able to continue serving the company for personal or retirement-related reasons. The business must ensure that its operations are unaffected by the director's departure or death. It must handle both director discontinuations and, if any, the hiring of a new director.

A respectable and trustworthy legal business service provider in India, Lawgical Adda can help with director appointment online in India.