Directors are the brain and guiding force behind a company. The Companies Act, 2013, under Section 152, governs the appointment of directors to ensure transparency, accountability, and proper corporate governance. This section lays down the fundamental rules regarding who can be appointed, how they are appointed, consents required, and the retirement of directors in public companies.
Applicability of Section 152
| Company Type | Applicability |
| Private Companies | Directors appointed as per Articles or Section 152(1). Rotation not mandatory. |
| Public Companies | Mandatory to comply with rotation of directors under 152(6) & 152(7). |
| One Person Company | Not applicable. |
| Government Companies | Governed by special provisions; however, 152 applies unless specifically exempt. |
Appointment by Members in General Meeting
- Initial directors may be named in the Articles of Association (AoA).
- Subsequent appointments of directors shall be made in the general meeting by the shareholders.
- This is the default method of appointment unless the Act or AoA provides otherwise.
📌Note: This excludes directors appointed by third parties, Board of Directors, or via proportional representation under special provisions.
Consent to Act as Director
- A person appointed as a director must give his/her consent in writing to hold the office.
- The consent must be filed with the Registrar of Companies (ROC) within 30 days of appointment using Form DIR-2.
- Form DIR-12 is also filed with ROC by the company notifying the appointment.
📄Documents required:
- DIR-2 (Consent Letter)
- DIR-8 (Disclosure of disqualification under Section 164)
All Directors Must Have DIN
- No person shall be appointed as a director unless he/she holds a valid Director Identification Number (DIN).
- DIN is mandatory and is applied through Form DIR-3 (or allotted during SPICe+ incorporation for new companies).
Disqualifications for Appointment
- A person disqualified under Section 164 shall not be eligible for appointment as director.
- Disqualifications include:
- Being of unsound mind
- Undischarged insolvent
- Conviction for offences involving moral turpitude
- Failure to file financial statements/annual returns for continuous 3 years, etc.
Retirement of Directors by Rotation
Applicable to Public Companies (not private):
- 2/3rd of the total number of directors (excluding independent directors) shall be liable to retire by rotation.
- Of these, 1/3rd shall retire at every Annual General Meeting (AGM), and are eligible for reappointment.
- If the place is not filled by the AGM, and no resolution is passed for reappointment or replacement, the retiring director shall be deemed reappointed (unless otherwise provided).
Company-related disqualifications:
- Company has not filed financial statements/annual returns for3 continuous years
- Company failed to repay deposits, debentures, or declared dividends
📌“Total number of directors” means all directors appointed including those filling casual vacancies, but excludes:
- Independent directors
- Additional directors
- Nominee directors
Related Rules and Forms
| Provision | Form | Description |
| Consent to act | DIR-2 | Written consent to act as a director |
| Intimation to ROC | DIR-12 | Appointment/Resignation of directors |
| Director Identification Number | DIR-3 | Application for DIN (for existing companies) |
| Disclosure of non-disqualification | DIR-8 | Declaration under Section 164(2) |
Penalties for Non-Compliance
| Nature of Default | Penalty |
| Appointment without DIN | ₹50,000 – ₹5 lakh (for company and director) |
| Failure to file DIR-12 | Penalty for company and officer in default |
| Appointing disqualified director | Disqualification of the person + monetary penalties |