INSERT QUESTION2 TEXT HERE

INSERT ANSWER2 TEXT HERE with a link .

Change in Designation of Director

Under the Companies Act 2013, directors possess designations such as Director, Additional Director, Alternate Director, Managing Director, Whole-time Director, Nominee Director, Director appointed in casual vacancy, etc. There can be changes in the designation of director from one to another some of which are explained below.

Change In Designation from Additional Director To Director

As per Section 152 (2) of the Companies Act 2013, appointment of directors of a company namely, every director shall be appointed in the general meeting. But this is “Save as otherwise provided in the Act”. This means except for the appointment of a director in a manner other than at a general meeting as provided in different provisions of the Act (For e.g. independent director, additional director, alternate director, a director to fill a casual vacancy, etc), the directors must be appointed at general meetings

The appointment of an additional director is an exception to the general rule enacted by Section 152 of the Companies Act 2013 that every director must be appointed by members of a company at a general meeting. Section 161(1) of the Companies Act 2013 gives the Board of directors a special but limited power to the appointment of directors as additional directors. This section enables any company to give the Board by the Articles a limited power of appointment of directors who are called additional directors. An additional director can hold his office of the additional director only up to the date of the AGM of the company held after his/her appointment (Section 161(1).

The Act facilitates the appointment of an additional director so that as and when the Board feels the need to increase the strength, they can choose to appoint an additional director without the sanction of shareholders. The appointment of an additional director lapses on the date of the next AGM at which his appointment has to be regularized by complying with the process laid down under Section 160. Appointment of additional director lapses at the time of the annual general meeting at which the shareholders shall exercise their rights to appoint or remove the directors. So there is a change in designation from Additional Director to Director for which E-Form DIR 12 is to be filed.

Change in Designation from Additional Director To Managing Director:

There is no provision in the Act that expressly provides that the person appointed as an additional director cannot also be appointed managing director of the company. If the board considers such an appointment he can be appointed firstly as an additional director and then at the same meeting as a managing director by the board on the terms to be approved by the shareholders at the next annual general meeting. At the annual general meeting, a resolution may be proposed for the regularization of his appointment since he remains in office as an additional director only up to the date of the annual general meeting. Subject to the regularization of his appointment by shareholders the terms and conditions relating to his appointment as managing director can be approved by a separate resolution. His tenure as managing director shall date back to the date on which he was appointed by the board as an additional director. In view of the above E-Form DIR 12 is to be filed for a change in designation from Additional Director to Managing Director.

Documents Required for the Change in Designation of Director

Following is the broad list of details and documents required:

Sr.No	DETAILS & DOCUMENTS
1.	DIN
2.	Purpose of filing form: Appointment/Cessation/Change in designation
3.	Designation after change
4.	Date of change in designation
5.	Category-Promoter/Professional/Independent/Small shareholder’s director
6.	Whether Chairman, Executive Director, Non-Executive Director
7.	Email ID of the Director
8.	Declaration of the appointee director in Form No DIR 2
9.	Declaration-particular of interest of directors in other entities
10.	Copy of General Meeting Resolution
11.	Copy of notices sent for the general meeting
12.	Copy of minutes of the general meeting
13.	Evidence of Cessation

Procedure for the Change in Designation of Director in a Company

Procedure For Appointment & Regularization of Additional Director:

Sr. No	PARTICULARS	PROCEDURE

1.	CHECK ARTICLES OF ASSOCIATION	Check if the articles of association provide for the appointment of an additional director. If yes, then the procedure for appointment as per the articles shall be followed in addition to the below:

2.	OBTAIN DIR 2 & DIR 8	Obtain Form DIR 2 and Form DIR 8 from the concerned appointee, Provided that DIR 2 shall be filed with the Registrar of Companies in Form DIR 12 within the period of 30 days from the date of appointment

3.	PASS A BOARD RESOLUTION	Pass a Board Resolution at a duly convened Board Meeting for the appointment of a person as an additional director who shall hold office till the date of the next annual general meeting or the last date on which AGM should be held

4.	FILE E-FORM DIR 12	File Form DIR 12 along with the necessary attachments with ROC within 30 days from the date of board resolution appointing an additional director.

5.	ISSUE NOTICE OF AGM	Issue Notice of AGM specifying regularization of the additional director as a special business.

6.	PASS ORDINARY RESOLUTION AT AGM	Pass a resolution at a duly convened annual general meeting for regularization of the director.

7.	FILE E-FORM DIR 12	File Form DIR 12 along with the necessary attachments with ROC within 30 days from the date of the resolution passed at the general meeting for changing the designation from Additional Director to Director

8.	ENTRY IN THE REGISTER OF DIRECTORS	Make an entry in the register of directors & KMP as per Section 170 read with r17 of the Companies (Appointment & Qualification of Directors) Rules, 2014 immediately.

Procedure For Change in Designation Of Additional Director To Managing Director:

Sr. No	PARTICULARS	PROCEDURE

1.	CHECK ARTICLES OF ASSOCIATION	Check if the articles of association provide for the appointment of an additional director. If yes, then the procedure for appointment as per the articles shall be followed in addition to the below:

2.	OBTAIN DIR 2 & DIR 8	Obtain Form DIR 2 and Form DIR 8 from the concerned appointee, Provided that DIR 2 shall be filed with the Registrar of Companies in Form DIR 12 within the period of 30 days from the date of appointment

3.	PASS A BOARD RESOLUTION FOR THE APPOINTMENT OF AN ADDITIONAL DIRECTOR	Pass a Board Resolution at a duly convened Board Meeting for the appointment of a person as an additional director who shall hold office till the date of the next annual general meeting or the last date on which AGM should be held

4.	FILE E-FORM DIR 12	File Form DIR 12 along with the necessary attachments with ROC within 30 days from the date of board resolution appointing an additional director.

5.	PASS A BOARD RESOLUTION FOR THE APPOINTMENT OF A MANAGING DIRECTOR	· Pass a Board Resolution at a duly convened board meeting for appointment & remuneration to Managing Director/Whole-time Director subject to the approval of members at the next general meeting

6.	FILE E-FORM MGT 14 WITH THE REGISTRAR	File Form MGT 14 along with the necessary attachments with ROC within 30 days from the date of the board resolution appointing the Managing Director in terms of Section 117 of the Companies Act 2013

7.	ISSUE NOTICE OF GENERAL MEETING	Issue a notice of general meeting for considering the appointment of Managing Director. Ensure that the explanatory statement for the item of appointment & payment of remuneration to the managerial personnel.

8.	PASS ORDINARY RESOLUTION AT AGM	Pass a resolution at a duly convened annual general meeting for regularization of the director.

9.	PASS RESOLUTION FOR MANAGING DIRECTOR/WHOLE TIME DIRECTOR	General meeting resolution passed at a duly convened meeting for appointment & remuneration to Managing Director. Where the proposed appointee has attained the age of 70 years, a special resolution may be passed by the company for appointing such a person as a Managing Director. The explanatory statement attached to such resolution should provide the justification for the appointment of such a person

10.	File Form MGT 14	The certified copy of the special resolution shall be filed with the ROC within a period of 30 days from the date of passing of the resolution

11.	FILE E-FORM DIR 12	File E-Form DIR 12 along with the necessary attachments with ROC within 30 days from the date of the resolution passed at the general meeting for changing the designation from Additional Director to Managing Director

12.	Register of Directors & KMP	Make an entry in the register of directors & KMP as per Section 170 read with r17 of the Companies (Appointment & Qualification of Directors) Rules, 2014 immediately.

Features

A director may initially be appointed under one designation. Later his designation can be changed.
There can be a change in designation from Additional Director to Director, Additional Director to Managing Director, Managing Director to Director, Managing Director to Whole-time Director, Whole Time Director to Managing Director, etc.
Section 161(1) explicitly provides that the additional director shall hold office only up to the date of the annual general meeting, it follows that his appointment cannot be regularized by shareholders at any other general meeting. The 2013 Act contemplates the regularization of the appointment of the additional director only at the annual general meeting.
Sections 196 and 117 of the Companies Act 2013 governs the provisions regarding the appointment, re-appointment, and change in designation of Managing Director, Whole Time Director of Company. There can be Changes in Designation from Director to Managing Director or from Managing Director to Whole Time Director,
E-Form DIR 12 is to be filed with the Registrar for change in designation within 30 days of such change.

Have Queries? Talk to us!

SMS VOICE

Frequently Asked Questions

Is Additional Director to be regularized only in Annual General Meeting?

An additional director holds office only up to the date of the annual general meeting, it follows that his appointment cannot be regularized by shareholders at any other general meeting.

How can a designation of director be changed from Managing Director (Executive) to Director (Non-Executive)?

A director can submit a resignation letter to the Company stating that he wishes to resign from the post of Managing Director but wants to continue as Director of the Company. After receiving the request, the Board can consider the same in the Board Meeting & file E-Form DIR 12 for change in designation

How does the appointment of the Managing Director takes place?

In case the appointee is not an existing Director, then first he would be appointed as an additional director and then as a Managing Director.
When the appointee already holds a position of director in the company, he can be appointed as a Managing director.