Alternate Director Appointment Procedure & Resolution Format

Section 161(2) of Companies Act 2013 deals with the Appointment of Alternate Director. The following article is an detailed explanation of Meaning of Appointment of Alternate Director along with the Procedure for Appointment of Alternate Director under the Companies Act 2013. Section 161(2) of the Companies Act, 2013 provides that the Board of directors of a company may, if so authorized by its Articles or by a resolution passed by the Company in general meeting, appoint an alternate director to act for a director during his absence from India. Also read our Previous articles on Directors Appointment in casual Vacancy and Appointment of Additional Director.

Appointment of Alternate Director Procedure & Resolution Section 161(2) of Companies Act 2013

Appointment of Alternate Director

Section 161(2) of the Companies Act, 2013, empowers the Board of directors of a company to appoint, if the articles provide or a resolution passed by the company in general meeting so authorises, an alternate director to act in place of a director during his absence for not less than three months, from the State in which the Board meetings are ordinarily held.

The alternate director holds office for the period the original director is away from the State and when the original director returns, the alternate director ceases to be director.

If the term of office of the original director comes to an end before he returns, the provisions of the Act relating to automatic re-appointment of retiring directors in default of another appointment will apply to the original director and not to the alternate one. Thus, the original and not the alternate director will be deemed to be reappointed.

Only a person qualified to be an independent director shall be appointed as an alternate director for an independent director.

Procedure for appointment of an alternate Director

Consult the Articles of Association of the company to see whether they authorize the Board to appoint an alternate director. Otherwise, either alter them accordingly or pass a resolution in company’s general meeting authorizing the Board to make such appointment.

Where it is proposed to appoint a person as an alternate director his written consent to act as director shall be obtained.

Check whether alternate director to be appointed in board meeting has obtained Director Identification Number (DIN). If not then ask such director to make application to Central Government for obtaining DIN and ensure that the Director has intimated his Directors Identification Number to the Company.

Convene a Board meeting after giving notice to all the directors as per section 173. The Board may approve the appointment by passing a resolution either at a Board meeting or by circulation.

Ensure that the consent of the director as well as the declaration from the director has been obtained.

The company has to file particulars of director in Form DIR – 12 with the Registrar of Companies within thirty days of the appointment after paying the requisite fee electronically.

For the purpose of filing Form DIR – 12, the following attachments are required:

  • Letter of appointment
  • Consent letter of appointee director

Ensure that said Form is digitally signed by managing director or manager or secretary of the company and also certified by a CS or CA or CMA in whole-time practice by digitally signing it.

The particulars of appointment of director should also be given to the stock exchange if the shares of the company are listed.

The particulars of the director and other aspects of the director have to be entered by the company in the registers maintained under Sections 170 and 189

After appointment the director concerned has to inform other companies in which he is director about his appointment. [Section 165]

The said alternate director will not hold office as such for a period longer than that permissible for the original director in whose place he has been appointed and shall vacate office if and when the original director returns to the State in which the Board meetings are ordinarily held.

Where the alternate director vacates his office as per the section, the Board may reappoint him as an alternate director when the original director leaves the State concerned.

Appointment of an alternate Director – Resolutions

There are mainly three situations which relates to the appointment of Alternate Director as prescribed under Section 161 of the Companies Act, 2013.

  • In case the Articles of Association of a Company have provision regarding Appointment of Alternate Director

Draft Broad Resolution for Appointment of Alternate Director

“RESOLVED THAT pursuant to Section 161(2) and all other applicable provisions of the Companies Act, 2013, (including any statutory modification(s), enactment(s) or re-enactment(s) thereof for the time being in force) and in terms of the provisions of the Article No. __ of the Article of Association of the Company, Shri X be and is hereby appointed as an Alternate Director to Shri XX, Executive Director during his absence from India and who shall vacate his office as and when Shri XX, Executive Director returns to India.”

  • In case the Articles of Association of a Company does not have any provision for Appointment of Alternate Director(s)

Draft General Meeting Resolution – Authorising Board of Directors for Appointment of Alternate Director :

“RESOLVED THAT pursuant to Section 161(2) and all other applicable provisions of the Companies Act, 2013, (including any statutory modification(s), enactment(s) or re-enactment(s) thereof for the time being in force), the Board of directors of the Company be and is hereby authorised to appoint an Alternate Director to act for a Director (hereinafter called ‘the Original Director’) during his absence for a period of not less than 3(three) months from India and an alternate director shall vacate his office as and when original director returns to India.”

  • In case of addition of New Article in the Alteration of Association of the Company for Appointment of Alternate Director

Draft Special Resolution for Alteration of the Articles of Association of the Company for Appointment of Alternate Director 

To consider and if thought fit, to pass, with or without modification(s), the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to Section 14 and all other applicable provisions of the Companies Act, 2013, (including any statutory modification(s), enactment(s) or re-enactment(s) thereof for the time being in force), the Articles of Association of the Company be and is hereby amended by adding a new article __, Appointment of Alternate Director, as follows:

‘The Board may appoint any person to act as an Alternate Director for a Director(hereinafter called as ‘the Original Director’ in this Article __), subject to the provisions of section 161(2) of the Companies Act, 2013, during the absence of that Original Director for a period of not less than three months form India.

An Alternate Director shall be entitled to notice of meetings of the Board and to attend and vote there at accordingly, but he shall ipso facto vacate office if and/when the absent director returns to India.

An Alternate Director if appointed by more than one original director, will be entitled to vote for all original directors but sitting fees shall be paid in respect one director only.’

RESOLVED FURTHER THAT Shri X, Director and Shri Y, Company Secretary be and are hereby severally authorised to perform all acts, deeds and things, execute documents, and make all filings, as may be necessary to give effect to the above resolution and to take all such steps for giving any such direction as may be necessary or desirable.”