How are directors appointed at the time of company incorporation?

It is essential to meet some of the basic requirements to start a company.  For example, there must be a minimum of 2 directors and 2 shareholders/subscribers (except in One Person Company) however both the director and subscriber can be the same person. Before company registration, one should know about the first directors of a company.

Who are the first directors? 

At the time of company registration with MCA, the individuals who become the director are the first directors of the company. But while incorporation, if there are no such directors then the individual subscribers to the MOA will automatically become the directors of the company. 

Eligibility to become a first director 

Requirements to become a director:

• Must be an individual with a sound mind. 
• The director must be solvent. 
• At least one director must be an Indian resident. 
• There is no minimum age specified but the individual must be a major. 
• The person free from any conviction of any any legal offense.
• If the person is a director of any other company, then such company should have filed its annual returns with MCA every year. 
• Any other clause as specified under articles of the company.  

How is the appointment of directors done?

MCA has notified a new simplified process of incorporation of a company.  To become a director at the time of incorporation, now there is no prior need to have DIN- Director Identification Number. The DIN is allotment takes place at the time of registration of the company. Also, it is necessary to add the details of the directors in the e-form as provided by MCA. Apon the form appoval, the person will become the director of the company and a along with the DIN allotment. The master data of the director will be available on the MCA portal after the incorporation of the company.

At the time of appointment of directors, the form should have the following director’s documents attached.

• PAN, mandatory in case of Indian national. 
• Identity proof such as Passport/Election card/Driving License/Aadhar card 
• Address proof such as the latest bank statement or any utility bill in the name of the director 
• Mobile number and email id of the director 
• It is mandatory to apostile all the documents apostilled if the director is non-resident of India.

In the new form of incorporation, a maximum of 3 DIN can be allotted. So if persons are not having DIN then a maximum of 3 persons can be appointed as directors. Other directors can be added later on.    

There are times when the need arises at the later stage of running a business where directors need to change.In such cases, removing first directors with a valid reason is important and later on, adding new directors is possible. Or the director can also resign from the company at any point of time. But the number of directors should not be less than 2 in a private company and 3 in a public company.

Conclusion 

As the company is an artificial person it cannot run the business by itself. There is a need for persons who can run the company and therefore appointment of directors take place during the incorporation.