Appointment of Directors

The Companies Act, 2013 recognises several distinct routes by which a person becomes a director, reflecting the different circumstances in which a directorship needs to be filled — at incorporation, at a general meeting, between two general meetings, or to secure minority representation.

The first directors of a company are usually named in its Articles of Association; where the Articles do not name them, Section 152(1) provides that the subscribers to the memorandum who are individuals shall be deemed to be the first directors of the company until directors are duly appointed in accordance with the Act. Subsequent directors, under Section 152(2), are appointed by the company in general meeting, except where the Act expressly provides another mode (such as appointment by the Board or by the Central Government/Tribunal in specific situations). Before such an appointment, Section 152(4) and (5) require the person being appointed to furnish his DIN and a declaration that he is not disqualified under Section 164, and the company must file the required particulars with the Registrar of Companies.

A distinct and commonly tested mechanism is appointment by the Board itself, used to fill a vacancy quickly without waiting for a general meeting. Section 161(1) allows the Board to appoint an Additional Director, who holds office only up to the date of the next annual general meeting. Section 161(2) allows the Board to appoint an Alternate Director to act for a director who is absent from India for a period of not less than three months, the alternate vacating office when the original director returns. Section 161(3) allows the Board, if authorised by the Articles, to appoint a person nominated by an institution in pursuance of an agreement, or by the Central or State Government, or otherwise, as a Nominee Director representing the nominating body's interest. Section 161(4) allows the Board of a public company to fill a Casual Vacancy — one arising by death, resignation, or disqualification of a director appointed in general meeting — subject to the appointment being approved by the members at the next general meeting. …