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Independent director

lalbabu (CA Practice ) (53 Points)

17 December 2014

Dear All,

What is process of appointment under independent director, i have enrolled before 2 years back but there is no response,

Is there any other requirement like DIN number or any other process for selection under Independent Director.

Kindly advise.

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1 Replies

Arpit Shah (Accountant) (21438 Points)
Replied 17 December 2014

APPOINTMENT OF DIRECTOR

Appointment of directors for this blog post does not include re – appointment of directors as such. But surely provisions are different only on compliance withSection 160 of the Companies Act 2013.

When an appointment of a director is proposed, the process starts with Notice of candidature under Section 160.

A person who is not a retiring director in terms of section 152 shall, subject to the provisions of this Act, be eligible for appointment to the office of a director at any general meeting, if he, or some member intending to propose him as a director, has, not less than fourteen days before the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as the case may be, the intention of such member to propose him as a candidate for that office, along with the deposit of one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the case may be, to the member, if the person proposed gets elected as a director or gets more than twenty-five percent of total valid votes cast either on show of hands or on poll on such resolution. The company shall inform its members of the candidature of a person for the office of director under sub-section (1) in such manner as may be prescribed.

Further procedure related to the notice is explained under Rule 13 of the Companies (Appointment and Qualification of Directors) Rules 2014.

The company shall, at least seven days before the general meeting, inform its members of the candidature of a person for the office of a director or the intention of a member to propose such person as a candidate for that office-

(1) by serving individual notices, on the members through electronic mode to such members who have provided their email addresses to the company for communication purposes, and in writing to all other members; and

(2) by placing notice of such candidature or intention on the website of the company, if any.

It shall not be necessary for the company to serve individual notices upon the members as aforesaid, if the company advertises such candidature or intention, not less than seven days before the meeting at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and circulating in that district, and at least once in English language in an English newspaper circulating in that district.

This notice is not required in case of reappointment of a director retiring by rotation. This shall be followed by moving the motion before the general meeting, consideration, debate, passing of the resolution and finally in appointment of a director. Yes, postal ballot or electronic voting may take place in accordance with the Companies Rules. Finally, there will be a return of appointment.

Rule 18 of the Companies (Appointment and Qualification of Directors) Rules 2014 laid down procedure for return of Appointment.

A return containing the particulars of appointment of director or key managerial personnel and changes therein, shall be filed with the Registrar in Form DIR – 12 along with such fee as may be provided in the Companies (Registration Offices and Fees) Rules, 2014 within thirty days of such appointment or change, as the case may be.

DIR – 12:

You can file this eForm with different event dates (date of appointment, date of change in designation and date of cessation) only if these dates are within 30 days of the filing date. If any of the date(s) are beyond 30 days, then separate form is to be filed for every such event date.
For filing of details of two or more events (for example, appointment and cessation) relating to the same person, you are required to file separate forms. These cannot be filed through the same eForm.
It is advised that you file the eForm in the chronological order of events. It implies that before filing this eForm you should ensure that no Form DIR-12 is pending to be filed for the particular company where the date of event is earlier than the date(s) entered in this form.
If number of directors is more than 15, addendum is required to be filed with eForm DIR12. Addendum shall be allowed to be filed only for those cases where eForm DIR-12 has been filed and corresponding Form DIR-12 Addendum is required to be filed. EForm DIR-12 Addendum shall be allowed to be resubmitted only for those cases where the eForm DIR-12 Addendum is pending for resubmission eForm DIR-12.
CIN and DIN helps to pre – fill many details.
Select whether the person is being appointed or is ceasing to be associated with the company or there is change in designation. In case of a new company, only appointment can be selected.
Select the designation of the person from the drop down values. In case of change in designation, select the new designation. In case of cessation, select the same designation as at the time of appointment or change in designation. When an existing director becomes a Managing Director/Whole Time Director; or an existing Managing Director/Whole Time Director ceases to be so and only remains as a director, then also the option Change in Designation should be used to file the eForm.
Select the category which is most appropriate. This is not required to be selected in case of cessation. Independent category can be selected only if company is a public company. Select one or more options that whether the director is Chairman, Executive or Non – Executive (Executive and Non – Executive director, both cannot be selected). It shall be mandatory to select either executive director or non – executive director if the option chairman is selected. Option ‘Non – executive director’ cannot be selected if designation selected is Whole-time director or Managing director. If ‘Independent’ is selected under category then ‘Executive director’ cannot be selected.
In case of an alternate director, enter the DIN of the director to whom the appointee is alternate and click “Pre-fill” button. System will automatically display the name of the director to whom the appointee is alternate. This is not required to be entered in case of cessation and is mandatory in case designation selected is Alternate Director.
In case of appointment of a nominee director, enter the name of the company or institution whose nominee the appointee is. This is mandatory in case of nominee director and in case of appointment or change in designation.
In case of cessation:

o System will automatically select Director or Managing Director on the basis of the designation selected in the eForm.

o Enter the date of cessation and select the reason of cessation from the drop-down list.

o Nomination withdrawn by appointing authority can be selected only if the Designation entered is nominee director.

o Date of cessation entered should be same as date entered while disabling DIN in case of death.

o Vacation of office or Not been reappointed can be selected only if the designation entered is alternate director or additional director.

Interest in other entities is required to be mentioned in case of appointment only. User can enter the details of one such entity and if the number is more than one, then user is required to attach sheet separately for such details.

Attachments:

o Letter of appointment is mandatory to attach in case of an appointment of a Director / Manager / Company Secretary / CEO / CFO.

o Declaration by first director in Form INC-9 is mandatory to attach in case of a new company.

o Declaration of the appointee director, managing director, in Form No. DIR-2 is mandatory to attach in case of appointment of a Director / Manager / Company Secretary / CEO / CFO.

o Notice of resignation is mandatory to attach in case cessation is due to resignation of a Director.

o Evidence of cessation is mandatory to attach in case of cessation of a Director / Manager / Company Secretary / CEO / CFO.

o Interest in other entities of director it is mandatory to attach in case number of entities entered is more than one.

Fee for filing e-Forms or documents in case of company have share capital:

Nominal Share Capital	Fee applicable
Less than 1,00,000	Rupees 200
1,00,000 to 4,99,999	Rupees 300
5,00,000 to 24,99,999	Rupees 400
25,00,000 to 99,99,999	Rupees 500
1,00,00,000 or more	Rupees 600