Additional Directors are appointed temporarily. They also have the same powers as a director of a company and are subject to all the obligations that a director of a company has. An additional director is empowered to become a permanent director in the Annual General Meeting of the company. The board of directors may exercise the power to appoint additional directors only if authorized by the Articles of Association. If authorized by the Articles of Association, the Board may appoint any person as an additional director other than a person who fails to be appointed as a director in a general meeting.
They are included in calculating the maximum number of directors that a particular company can appoint. There may be situations where the Board of Directors of a company may wish to appoint a person to the Board; In case it is not possible to convene a general meeting to seek approval of the members, in such a case we may appoint a person as an additional director in the company till the next annual general meeting. Also, any act done by an Additional Director shall not be void if it is by the Memorandum and Articles of Association of the Company along with the provisions of the Companies Act, 2013.
APPOINTMENT OF ADDITIONAL DIRECTOR
As per the provisions of Section 161 (1) of the Companies Act, 2013, the articles of a company may be conferred on its board of directors. Power to appoint any person, except the person who fails to be appointed as a director in general meeting, the right to appoint any person, any person, at any time as an additional director who is in office as on the date hereof. At the next Annual General Meeting or the last date on which the Annual General Meeting. Which is earlier.
· The board of directors may exercise the power to appoint additional directors only if authorized by the articles of association.
· If authorized by the Articles of Association, the Board may appoint any person as an additional director other than a person who fails to be appointed as a director at a general meeting.
· Additional directors may be appointed by passing a resolution in the meeting of the board or by circular.
· An Additional Director holds office only till the next Annual General Meeting of the Company or the due date of the next Annual General Meeting, whichever is earlier.
Procedure for Appointment of Additional Director :
1) Always ensure that the company’s articles authorize the board of directors to appoint additional directors. If not, amend the articles of association accordingly.
2) Ensure that the person appointed as Additional Director does not suffer from any mention of disqualification under Sections 164 and 165 of the Companies Act.
3) Ensure that the person proposed by the Board of Directors for appointment as Additional Director does not fail to appoint as Director in the General Meeting.
4) Ensure that the person proposed to be appointed as an Additional Director must have a valid Director Identification Number before being appointed as a Director. If he does not have a DIN then follow the prescribed procedure to get a DIN.
5) Ensure that the person proposed to be appointed as a director submits to the company his DIN and a declaration in DIR 8 that he is not eligible to be a director
6) His written concern to act as Director at phone number DIR – 2 with the following documents:
a. Valid ID proof
b. Valid address proof
If the appointment resolution is proposed to be considered at the meeting of the Board of Directors:
a. Not less than 7 days’ notice and agenda of a board meeting or issue a short notice in writing to each director of the company on an urgent basis at the address registered with the company. Also, follow the procedure prescribed for issuing and signing the notice of board meeting.
b. Meeting of the Board of Directors –
Pass a necessary board resolution for the appointment of an Additional Director to hold office till the date of the next Annual General Meeting of the Company or the date of the next AGM whichever is earlier.
The company is authorized to sign and file the relevant forms with the authorized company secretary or registrar of companies and to perform such acts and things as may be required to implement the decision of the board.
Term of Additional Director :
A person appointed as an Additional Director may hold office till the date of the next Annual General Meeting. In the absence of an Annual General Meeting, their term of appointment shall expire on the date on which the Annual General Meeting should be held.
Power and Obligation :
Although appointed temporarily, an Additional Director is vested with the same powers as a Director. Moreover, they are subject to all the obligations and limitations of the director. They also have the right to seek appointments as permanent directors in the annual general meeting. An additional director should exercise his/her powers in the interest of the company and the shareholders.
Eligibility of Additional Directors for re-appointment:
Section 160 of the 2013 Act empowers any person other than a retired director to stand for directorship. Such a director is deemed to be eligible for the post provided that notice in writing is sent to the registered office of the company at least 14 days before the general meeting proposing such person as a director.
Several number of Additional Directors :
The number of directors and additional directors taken together shall not exceed the number specified in the Articles of Association. For example, if the company’s articles of association allow for the appointment of a total of 11 directors and the company currently has 5 full-time directors, the board of directors may appoint 6 additional directors.
Further, the Board is not authorized to appoint any person as an additional director whose appointment resolution has been rejected by the shareholders in the general meeting.
Appointment of an Additional Director as a Managing Director :
The board of directors may appoint additional directors as managing directors of the company. The appointment does not mean that the Additional Director is exempt from the terms of service (expiration on the date of the Annual General Meeting), but the Additional Director may apply for re-election and, if re-elected, may continue. Managing Director post.
FAQs ( Appointment of Additional Director )
Who has the power to appoint additional directors to a company?
Section 152 provides that every director shall be appointed by the company in a general meeting unless otherwise provided in law. So shareholders have the original right to appoint directors.
Which resolution is necessary for the appointment of an additional director?
Board resolution for the appointment of additional directors.
What is the main purpose of an additional director?
Although appointed temporarily, an Additional Director is vested with the same powers as a Director. Moreover, they are subject to all the obligations and limitations of the director. They also have the right to seek appointments as permanent directors in the annual general meeting.
What is the actual difference between a director and an additional director?
The main difference between the two is their appointment process and their tenure. A director is appointed by the members of the company by passing a general resolution in a general meeting while an additional director is appointed by a resolution passed by the board.
If the Additional Director is not regular what happens?
Additional Director’s tenure is only till the next AGM. If he is not regularized at the AGM, his term automatically expires. The board of directors may appoint additional directors at its board meeting if the board wishes to retain them on the board as usual.
Are additional directors be regularized before AGM?
The tenure of Additional Directors is till the next Annual General Meeting (AGM). However, it can be regularized before the AGM by passing a resolution in the Ordinary General Meeting.
Is it possible to appoint an additional director in a casual vacancy?
A person may be appointed to fill casual vacancies subject to the Company’s AOA. Such power is exercised by the Board only if a vacancy occurs in respect of a director appointed in a general meeting of shareholders.
How can change the directors to additional directors?
An additional director can act as a director only if the shareholders propose him as a director in a general meeting (either an Annual General Meeting (AGM) or Extraordinary General Meeting (EGM).
Is it possible to add another director to my limited company?
There is usually no upper limit, so you can generally appoint as many directors as you want. However, some companies include a provision in their articles of association to limit the number of directors they have at any one time. If a company has only one director, that director must be a human being.
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