MCA issues Companies (Appointment and Qualification of Directors) Amendment Rules, 2018

MCA issues Companies (Appointment and Qualification of Directors) Amendment Rules, 2018

January 29, 2018 CORP, Industries, states 0

The Ministry of Corporate Affairs (“MCA”) has issued the Companies (Appointment and Qualification of Directors) Amendment Rules, 2018 (“Amendment Rules”) through a notification dated 26th January, 2018, amending the Companies (Appointment and Qualification of Directors) Rules, 2014 (“Principal Rules”).

Please note that the Amendment Rules are yet to be published in the Official Gazette and will come into force on the date of such publication.

The key highlights of the amendment are given below for your reference:

Principal Rules Amendment Rules Implication
Rule 9:

 

Application for Allotment of Director Identification Number

 

(1) Every individual, who is to be appointed as director of a company shall make an application electronically in Form DIR-3, to the Central Government for the allotment of a Director Identification Number (DIN) along with such fees as provided in the Companies (Registration Offices and Fees) Rules, 2014.

(3)     (a) The applicant shall download Form DIR-3 from the portal, fill in the required particulars sought 4[therein, verify and sign the form] and after attaching copies of the following documents, scan and file the entire set of documents electronically-

 

(i) photograph;

 

(ii) proof of identity;

 

(iii) proof of residence;

 

(iv) [Omitted]

 

(v) specimen signature duly verified.

 

(b) Form DIR-3 shall be signed and submitted electronically by the applicant using his or her own Digital Signature Certificate and shall be verified digitally by-

 

(i) a chartered accountant in practice or a company secretary in practice or a cost accountant in practice; or

 

(ii) a company secretary in full time employment of the company or by the managing director or director of the company in which the applicant is to be appointed as director.

Rule 9:

 

Application for allotment of Director Identification Numberbefore appointment in an existing company

 

(1) Every applicant, who intends to be appointed as director of an existing company shall make an application electronically in Form DIR-3, to the central Government for allotment of a Director Identification Number (DIN) along with such fees as provided under the companies (Registration offices and Fees) Rules, 2014. Provided that in case of proposed directors not having approved DIN, the particulars of maximum three directors shall be mentioned in Form No.INC-32 (splCe) and DIN may be allotted to maximum three proposed directors through Form INC-32 (splce)

 

(3) (a) The applicant shall download Form DIR-3 from the portal, fill in the required particulars sought therein, verify and sign the form and after attaching copies of the following documents, scan and file the entire set of documents electronically-

 

(i) photograph;

 

(ii) proof of identity;

 

(iii) proof of residence;

 

(iiia) board resolution proposing his appointment as director in an existinq company

 

 

(iv) [Omitted]

 

(v) specimen signature duly verified.

 

(b) Form DIR-3 shall be signed and submitted electronically by the applicant using his or her own Digital signature certificate and shall be verified digitally by a company secretary in full time employment of the company or by the managing director or director or CEO or CFO of the company in which the applicant is intended to be appointed as director in an existing company.

i. The Amendment Rules have substituted the marginal heading for Rule 9. As per the amendment, now the marginal note is clearer in stating that the application for allotment of Director Identification Number (“DIN”) has to be made before such appointment in an existing company. This aspect was not expressly mentioned in the Principal Rules.

 

ii. The Amendment Rules have also substituted Rule 9(1).

 

Rule 9(1) states that every applicant, intending to be appointed as director of an existing company must apply electronically in Form DIR-3, to the Central Government for allotment of a Director Identification Number (DIN) along with fees as provided under the Companies (Registration Offices and Fees) Rules, 2014.

 

Through the amendment which has replaced the word ‘individual’ with ‘applicant’, it has been stressed that individuals have to apply for the DIN before being appointed as a Director in an existing company.

 

The amendment has effectively also inserted a proviso stating that in case the proposed directors do not have approved DIN, then particulars of maximum 3 directors has to be mentioned in Form No.INC-32 [Simplified Proforma for Incorporating Company Electronically] (“SPlCe”) and then DIN may be allotted to maximum 3 such proposed directors through Form INC-32 (SPlCe).

 

Prior to this, the Principal Rules were silent on this aspect related to proposed directors who did not have approved DIN.

 

iii. As per the amendment, the applicant must also submit the board resolution proposing his appointment as director in an existinq company, when Form DIR-3 [Intimation of Director Identification Number by the company to the Registrar DIN services] is being electronically filed along with other required documents.

 

Prior to the amendment, the applicant was not required to include board resolution proposing his appointment as director in an existinq company while filing Form DIR-3.

 

iv. The Amendment Rules have substituted Rule 9(3)(b) of the Principal Rules.

 

As per the amendment, Form DIR-3 should be signed and submitted electronically by the applicant using his or her own Digital signature certificate.

 

Further, it has to be verified digitally by:

 

a. A company secretary in full time employment of the company or

 

b. The managing director or director or

 

c. The CEO or CFO of the company in which the applicant is intended to be appointed as director in an existing company.

 

Therefore, the Amendment Rules have newly provided the option to CEO or CFO of the company in question to verify the Form DIR-3 by the applicant.

 

Prior to this, such verification could also be done by a chartered accountant in practice or a company secretary in practice or a cost accountant in practice, however, now this option has been removed.

 

In addition to the above, the Amendment Rules have also substituted the following Forms:

  1. Form No. DIR- 3: Intimation of Director Identification Number by the company to the Registrar DIN services.
  2. Form No. DIR- 12: Particulars of appointment of Directors and the key managerial personnel and the changes among them.

For further details, please refer to the hyperlink given below.

Source: Ministry of Corporate Affairs

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