Procedure for Appointment of Alternate Director

Procedure-Appointment-Alternate-Director

Section 161 (2) of the Companies Act, 2013 deals with the Appointment of Alternate Director. As per the provisions of section 161 (2) states that :

The Board of Directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a person holding any alternate directorship for any other director in the company, to act as an alternate director for a director during his absence for a period of not less than three months from India:

Provided that no person shall be appointed as an alternate director for an independent director unless he is qualified to be appointed as an independent director under the provisions of this Act:

Provided further that an alternate director shall not hold office for a period longer than that permissible to the director in whose place he has been appointed and shall vacate the office if and when the director in whose place he has been appointed returns to India:

Provided also that if the term of office of the original director is determined before he so returns to India, any provision for the automatic re-appointment of retiring directors in default of another appointment shall apply to the original, and not to the alternate director.

Procedure for Appointment of Alternate Director

1.  Check the Articles of Association of the Company whether they authorise the Board of directors of the Company to Appoint Additional Director. If not, alter the Articles of Association accordingly. (Procedure for alteration of Articles of Association according to section 14).
2. Ensure that the persons to be appointed must have [Director Identification Number] (Section 152(4)) before being appointed as director. If the DIN is not allotted earlier make application for allotment of DIN in Form DIR-3 and Form DIR-4 as per Section 153.
3. Following Documents/Consent/Declaration from the proposed director:
a. Consent in writing to act as Director in form DIR-2 pursuant to Rule-8 of Companies (Appointment & Qualification of Directors) Rules, 2014.
b. Intimation in Form DIR-8 pursuant to Rule-14 in terms of Companies (Appointment & Qualification of Directors) Rules, 2014, to the effect that he/she is not disqualified u/s 164(2) of Companies Act, 2013.
c.  Disclosure of Interest in Form MBP.1 pursuant to section 184(1) read with rule 9(1) of Companies (Meetings of Board and its Powers) Rules, 2014. Remember one thing MBP.1 should not be dated earlier than date of his/her appointment as Director.
4. Convene Board Meeting after giving notice to all the directors to consider and approve the appointment of alternate director. (Section 161(2))
5.  Inform the Stock Exchange with which shares of the company are listed about the date of this meeting prior to the board meeting. [Clause 19 of the Standard Listing Agreement]
6. Hold board meeting and pass the necessary Resolution for the appointment of Alternate Director to act for the original director during his absence for a period of not less than three months from India [Section 161 (2)]
7.  In case of listed companies, inform the Stock Exchange within 15 minutes of the board Meeting, of the outcome of the meeting by letter or fax.
8. File form DIR-12 with the concerned ROC within 30 days from the date of Appointment.
9. Make necessary entries in the Register of Directors and in the Register of Director’s Shareholding.[Section 170,Rule 17,18 of The Companies(Appointment and Qualification of Directors)]
10.Notify the Stock Exchange with which shares of the Company are listed about the change in the company directors.
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