Executive Summary

In general, a company is governed by two authorities: i) shareholders and ii) directors. Directors, collectively called the Board of Directors, carry out their duties and exercise powers granted under the provisions of the Companies Act, 2013, Memorandum of Association, Articles of Association, and by way of resolutions passed by shareholders during meetings, to conduct the company's business as per its formation.

Individuals proposed to be appointed as directors often have common queries. It is crucial for directors to be well-informed about the requirements for becoming a director and their duties and responsibilities as directors. Failure to do so may lead to liability and penalties.

This FAQ aims to provide basic answers to questions commonly raised by individuals who are proposed to be appointed as directors or designated partners. It serves as a broad guide to help in the decision-making process when considering an appointment as a director in India.

Please note that the answers provided here are of a general nature and should not be considered as legal advice on any specific matter. The laws mentioned in this FAQ are subject to amendments over time. We recommend seeking appropriate legal advice before proposing an individual for directorship in India.

Should you require any further information/clarification or any advice, we would be happy to assist you.

1. Can a person resident outside India and citizen of another country become a director of an Indian company?

Yes, any person, regardless of citizenship/residential status, can become a director, subject to obtaining a Director Identification Number ("DIN"), as detailed in FAQ no. 9. However, if the person seeking appointment is a national of a country that shares a land border with India1, a security clearance from the Ministry of Home Affairs, Government of India, is a pre-requisite requirement.

1Press Note No. 3 (2020 Series) https://dpiit.gov.in/sites/default/files/pn3_2020.pdf

2. Can a “body corporate” or “company” be a director of an Indian company?

As per Section 149 of the Companies Act, 2013 (“CA 2013”) “Every company shall have a Board of directors consisting of individuals as directors”2.

In the aforesaid section, the word "individual" has been specifically used and as per literal interpretation of law only a natural person can act as a director in a company.

2Refer Sec 149(1) of the Companies Act, 2013

3. What is the minimum and maximum number of directors required for forming a Private Limited Company?

There should be at least 2 (two) directors and maximum of 15 (fifteen) in a Private Limited Company. To appoint more than 15 (fifteen) directors, approval of shareholders would be necessary.

4. What is the minimum and maximum number of directors required for forming a Public Limited Company?

There should be at least 3 (three) directors and maximum of 15 (fifteen) in a Public Limited Company. To appoint more than 15 (fifteen) directors, approval of shareholders would be necessary.

5. Whether there is a requirement of appointing “Resident Director” for forming a Private Limited Company and Public Limited Company?

Yes, there should be at least 1 (one) director who stays in India for a period of not less than 182 (One Hundred and Eighty-Two) days during each financial year. In case of a newly incorporated company, the requirement shall apply proportionately at the end of the financial year in which it is incorporated.3

3Refer: Section 149(3) of the Companies (Amendment) Act, 2017

6. What are the different types of directors under CA 2013?

The various types of directors are as below:

  1. Executive director - Any person who is a full-time employee of the company (i.e. Whole-Time director) or who is responsible for the day-to-day operations of the company (i.e. Managing director) will be called an Executive director. Thus, an Executive director can be designated as Managing director and Whole-Time director.
  2. Non–Executive director - CA, 2013 does not define Non-Executive director, however, we can derive the meaning from the definition of Executive director. Director who is not involved in the day-to-day functions or activities of the company is called a Non-Executive director.
  3. Additional director - The Board of Directors of a Company, if authorized by the Articles of Association, may appoint an additional director. The tenure of the additional director will be till the time of the next annual general meeting or the last date on which the annual general meeting should be held, whichever is earlier.
  4. Alternate director - Section 161(2) of the CA, 2013 deals with appointment of Alternate director.  When a director of a company is not in India for more than 3 (Three) months then an Alternate director can be appointed in place of original director.  Thus, the Alternate director exercises his duties for a limited time only i.e., only till the time the original director returns to India.
  5. Whole Time director - As per Section 2(94) of CA, 2013 – “Whole-Time director includes a director who is in the whole-time employment of the company. He has to be an executive director of the company.
  6. Nominee director –Section 149(7) and Section 161(3) of the CA, 2013 deals with a Nominee director. If it is authorized by the Articles of Association (AOA) of a company then the Board may appoint any person as a director nominated by any institution in pursuance of the provisions of any law for the time being in force. A nominee director is a representative of the stakeholder who protects the stakeholder’s interest.
  7. Independent director - Section 149(7) of the CA, 2013 deals with an Independent director. An independent director is a board member who provides an impartial opinion as they are not part of the company’s existing management. Independent directors are appointed based on expertise, experience, and qualifications. The presence of independent directors on the board is an important factor in ensuring transparency and accountability.
7. What are the pre-requisites to be appointed as a director in an Indian company?

As per CA 2013, having a Director Identification Number (“DIN”) and Digital Signature Certificate (“DSC”) is a mandatory requirement for an individual to be appointed as a director in an Indian company.

8. What is DIN

DIN is a unique identification number allotted to an individual, who is proposed to be appointed as director of a company and it is compulsory for every individual intending to be a director to obtain this number. Upon submission of necessary documents in e-form DIR 3 to the satisfaction of DIN Cell, DIN would be allotted instantly.

9. How can an individual acquire DIN and what is the process?

  • In case of incorporation of new company

    Any person intends to become a first director in a new Company shall have to make an application through e-form INC-32 (SPICe +) an integrated application form for incorporation of a company. Through this integrated application, DIN for 3 individuals can be obtained, in case the proposed directors do not have an approved DIN 4

  • In case of an existing company

    Any person intending to become a director in an existing company and who does not have a valid DIN shall make an application in e-form DIR-3 along with copies of identity and address proof , copy of Board resolution proposing the appointment of such person as a director from the company in which such person is intending to become a director and copy of security clearance certificate from Ministry of Home affairs,(if applicable).

4 Refer: Rule 38 of The Companies (Incorporation) Amendment Rules, 2018

10. What are the documents required for obtaining DIN?

DIN can be obtained by filing the supporting documents as follows:

  1. In case of Indian Nationals (including at the of Incorporation):
  1. Identity Proof of the applicant: PAN.
  2. Address Proof of the applicant: Any one of the following documents would suffice as address proof:
    1. Utility Bill in the name of the applicant;
    2. Driver’s License of the applicant; and
    3. Bank Statement in the name of the applicant.
  3. Proof of Identify and Proof of Address are required to be self-attested by the applicant.

    In case of Foreign Nationals: following documents will be required in case of Foreign Nationals:
  1. Copy of passport as an identity proof.
  2. Address Proof of the applicant: Any one of the following documents would suffice as address proof:
    1. Utility Bill in the name of the applicant;
    2. Driver’s License of the applicant; and
    3. Bank Statement in the name of the applicant.

All supporting documents should be attested by the Indian Embassy or a notary in the home country of the applicant. If the applicant has a valid multiple-entry Indian visa or Person of Indian Origin card or Overseas Citizen of India card, then the attestation could also be done by Public Notary/Gazetted Officer in India or practicing Chartered Accountant/Company Secretary/Cost and Works Accountant.

In case any documents are not in English language then the same needs to be translated in English from certified translator and such translated documents are also required to be notarized and apostilled from home country. 

The apostille is a certificate that verifies the origin of an official document, as India is a member of Hague Convention 1961, an apostilled document is considered as a document legalized for all purposes by all concerned in India.

11. Can I use same DIN for being appointed as Designated Partner in Limited Liability Partnership (“LLP”)?

Yes, DIN can be used for being appointed as Designated Partner in any LLP. One individual can have only one DIN and it is valid for lifetime, subject to filing of e-form DIR-3KYC or DIR-3KYC (WEB) form on or before September 30 of every year.

12. Does a director need to obtain DIN for each company / LLP where he may be appointed as a director?

No, DIN is a unique number allotted to each individual who has applied for it. A person can be a Director / Designated Partner in a maximum of 20 companies / LLPs at a given point of time with same DIN subject to not more than 10 directorships in public companies.

The CA 2013 does not allow a person to have more than one DIN and if any person obtains more than one DIN, it is a punishable offence under the CA 2013 and shall need to surrender his duplicate DIN(s).

13. What is a Digital Signature Certificate (“DSC”)?

DSC is a digital code (in the form of a USB token) created for electronically affixing it to digital documents. In India, the Information Technology Act of 2000 provides for the use of digital signatures on papers submitted in electronic form to ensure the security and legitimacy of the documents filed electronically. DSC is a piece of hardware in the form of a USB token that is password protected and can be updated at any moment by the DSC holder. Only individuals who have applied for DSC have access to the DSC password.

14. What is the use of DSC?

DSC is used for filing documents and e-forms with the Ministry of Corporate Affairs (“MCA”) under the CA 2013, tax returns and e-forms under different regulations as applicable to the entity. The filings with many other Government authorities may also be carried out by electronic filings using DSC.

15. What is the process of obtaining DSC?
  • Apply to a registered authority in India;
  • Submit following documents & information –
  • In case of Indian Nationals:
    • Proof of Identity- PAN is mandatory for Indian Nationals,
    • Proof of Residence - driver license, passport (if it has address) or Aadhaar or utility bill (not older than 2 (two) months) like gas or electricity or bank statement;
    • Passport size color photograph (in JPEG format);
    • Mobile number and email ID of the applicant.

All the documents which are submitted for DSC application are required to be self-signed by the applicant.

  • In case of Foreign Nationals:
    • Proof of Identity – Self-signed copy of Passport, self-signed copy of VISA (If the proposed individual is out of native country) and self-attested copy of Resident Permit certificate (If applicant is in India)
    • Proof of Residence – Self-signed copy of any other Government issued Address Proof, or driver license or utility bill (not older than 2 (two) months) like gas or electricity or bank statement
    • Mobile Number and Email ID of an Individual for whom DSC needs to be obtained.
  • Submit the scan copies of above documents to the authorities via email and Authority verifies the information and process the same.
  • Upon successful process, the applicant should do tele-verification, email verification and video-verification.
  • Only upon completion of the above verifications, the authority issues DSC to the end user.

The above process is indicative in nature and requirement may change based on the nationality/citizenship of the applicant and subject to change in process as may be amended from time to time under applicable laws.

16. Is it mandatory for director / designated Partner to obtain DSC?

As per Section 153 of CA 2013, Every individual intending to be appointed as a director / designated partner in a Company / LLP needs to make an application in e-form DIR-3 for allotment of DIN. The said e-form DIR-3 needs to be signed electronically using DSC by the individual who intends to obtain the DIN along with the DSC of the existing director / designated partner of the Indian company / LLP in which the individual proposes to get appointed.

17. Is there any requirement of verification of Know Your Customer (“KYC”) of a director?

Yes, as per Rule 12A of the Companies (Appointment and Qualification of Directors) Rules 2014, every individual who has been allotted a DIN as on 31st March of a financial year shall submit e-form DIR 3 KYC/DIR-3 KYC (WEB) to the Central Government on or before 30th September of immediate next financial year. Hence, each individual possessing DIN needs to update his KYC details annually within prescribed timelines for retaining his DIN in ‘Active’ status.

For the purpose of completing the KYC the Director will receive One Time Password (OTP) on his registered Mobile No. and Email id.

18. What if the director fails to file form DIR-3 KYC?

In case the individual fails to file form DIR-3 KYC with the MCA within prescribed timelines, then the DIN of the said individual shall be de-activated. The de-activated DIN shall be re-activated only after e-form DIR-3-KYC is filed with ROC along with the fee as prescribed under law.

19. Are there any disqualifications for appointment of a Director?

A person is not5 eligible for appointment as a director if:

  1. he is of unsound mind;
  2. he is an undischarged insolvent;
  3. he has applied to be adjudicated as an insolvent;
  4. he has been convicted by a court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than 6 (six) months and a period of 5 (five) years has not elapsed from the date of expiry of the sentence;
  5. an order passed by the court or tribunal for disqualifying him for appointment as a Director and the same is in force till date;
  6. he has not paid any calls in respect of any shares of the company held by him, either individually or jointly, and 6 (six) months have elapsed from the last day fixed for the payment of the call;
  7. he has been convicted of the offence dealing with related party transactions6 at any time during the last preceding 5 (five) years;
  8. if he does not hold valid DIN;
  9. he has not complied with the provisions of number of directorships.

In furtherance to the above, no person who is or has been already a director of a company shall be eligible for appointment if-

  1. such company in which he is a director has not filed financial statements or annual returns for any continuous period of 3 (three) financial years;
  2. has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for 1 (one) year or more.

5 Refer Sec 164 of the Companies Act, 2013

6 Refer section 188 of the Companies Act, 2013

20. What are the declarations / disclosures applicable to be given by a director?

The following details are required in various declarations to be provided under CA 2013:

  1. Form DIR-8 (Section 164 CA 2013)

    As per Section 164(2) CA 2013 and Rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014, all the directors of the company shall intimate to the Board about the companies in which he is or has been a director during the last three years disclosing whether he has incurred any disqualification or not under Section 164 CA 2013 in Form DIR-8.

    Details to be disclosed: Directorship in any Indian company in last 3 years; and

    Any Disqualifications as prescribed in FAQ No. 19.

  2. Form MBP-1 (Section 184 of CA 2013)

    The inherent philosophy behind this form is to ensure that the Directors never compromise on the fiduciary position that they occupy in relation to a Company and accordingly exclude themselves or make disclosure before participation in the decision making in the matter of such contracts or arrangements wherein there is a personal interest involved.

    Details to be disclosed: Any interest or concern in company(ies), bodies corporate, firms or other association of individuals, Nature of interest in them and shareholding of more than 2%; and

    Names of Spouse, Father (including step- father), Mother (including step-mother), Son (including step-son), Son’s wife, Daughter, Daughter’s husband, Brother (including step-brother) and Sister (including step-sister).

    A Director is required to give below mentioned declaration / disclosures as mentioned below:


    • At the first Board Meeting held in every financial year due to audit requirement; and
    • In case of appointment or reappointment;


    • At the first Board Meeting in which he participates as a director, post appointment;
    • At the first Board Meeting held in every financial year; and
    • At the first Board Meeting held after any change in the interest or concern in the disclosures already made earlier. 

21. Why a director needs to disclose details of all entities and relationship with other firms, body corporate, relatives etc. in form MBP-1? If not disclosed what will be the consequences?

As per Section 184 (1) of CA 2013, The Form MBP 1 requires disclosure of interest in other entities and every director needs to disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding.

As per Section 2 (77) of CA 2013, where relatives are defined and the same needs to be disclosed in Form MBP-1 as it will help to identify any related party transaction entered by the relatives of director.

The genesis of the disclosure under Form MBP 1 is essentially to ensure the company is in a position to track transactions with entities forming part of ‘related party’ and shifts the onus to track any such transactions with such disclosed (related parties) entities on the concerned company. Once a disclosure in Form MBP 1 is made by a director, then the onus automatically shifts to the Company.

By virtue of provisions of Section 184 (4), if a Director contravenes the provisions of CA 2013, such Director shall be liable with:

  • Penalty of Rs. 1,00,000;
  • Further, by virtue of Section 189 (6), every director contravening provisions of the section shall be liable to a penalty of Rs. 25,000; and
  • Contravention of provisions of Section 184 shall result in vacation of office of director by virtue of Section 167 (1) (c).

22. What are the risks and liabilities a director must bear for non- disclosure of information?

Every person intending to be appointed as a director needs to declare the information as the same is mandatorily required under CA 2013.

If a director contravenes the provisions due to non-disclosure of information below mentioned penal provisions will be applicable:

  1. Form DIR-8: Pursuant to Section 167 the office of the director shall become vacant if he incurs any disqualifications specified in Section 164.
  2. Form MBP-1: Pursuant to provisions of Section 184 (4), if a director contravenes the provisions of subsection (1) or sub-section (2), such director shall be liable with:
    • Penalty of Rs. 1,00,000;
    • Further, by virtue of Section 189 (6), every director contravening provisions of the section shall be liable to a penalty of Rs. 25,000; and
    • Contravention of provisions of Section 184 shall result in vacation of office of director by virtue of Section 167 (1) (c).

23. Whether a director’s email id and mobile no. made available to public?

Form DIR-2 which contains the email id and mobile no. of the director becomes a public document once e-form DIR-12 is filed with MCA for the appointment of director in the company.

Further the director will receive regular updates on his email id/mobile no. from MCA.

24. Whether information provided in form MBP-1 relating to interest and relatives available to public?

The Form MBP-1 is basically given to the company in which the director is appointed for easy tracking of Related party transactions and the details of related party and since this is given to the company it will be maintained internally and will not be publicly available.

25. Is it necessary to create account on MCA V3 Portal?

Every director needs to create a Business user account on MCA version3 portal and register his DSC on the same to enable filing of various forms of the company in which he is appointed as a director including his e-form DIR-3KYC or DIR-3KYC (WEB).

For creation of the same the director will receive One Time Password (OTP)s on his registered Email id and mobile No.

26. What are the duties of a director?

Brief duties of the directors include:

  • To act in accordance with the company’s Articles i.e. to act within the prescribed powers;
  • To act in good faith, in order to promote the company’s objects;
  • To act in the best interest of the company, its employees, shareholders, community and for the environment protection;
  • To exercise due and reasonable care, skill and diligence and independent judgment;
  • To avoid direct or indirect conflicts of interest;
  • To avoid undue gain or advantage either to himself or relatives, partners or associates;
  • Not to assign his office to any other person;

In addition to duties prescribed, based on study of various case laws and other provisions of the CA 2013, following are certain additional duties imposed on a Director:

  • To meet disclosure norms such as disclosing of particulars of directorship and shareholding in other entities;
  • To confirm on annual basis to the company that he is not disqualified to act as director;
  • To attend all or at least 1 board meeting during a period of 12 months;
  • To devote sufficient time and attention to the company’s affairs;
  • To maintain confidentiality;
  • Not to compete with the company; and
  • Not to misapply company’s assets or make secret profits.
27. What are the roles & responsibilities of a director?
  1. A director is considered to be an officer responsible for compliances of all applicable provisions of law applicable to the company.
  2. Can exercise all powers that a company is able to exercise.
  3. For contravention of any provision of law, along with the company, he would also be liable, being considered as an officer in default.
  4. Directors are collectively responsible for:
  5. Preparation of annual accounts, adoption of proper accounting policies.
  6. To take sufficient care for maintenance of adequate accounting records to safeguard the assets of the company and to prevent and detect any fraud and other irregularities.
  7. To lay down internal financial controls and to oversee their adequacy and effectiveness (in case of a listed company).
  8. To lay down proper systems to ensure compliance with the all applicable laws and to oversee their adequacy and effectiveness.
  9. To implement a risk management policy and to identify the element of risk, which may threaten the existence of the company.
28. What are the rights of directors?

The rights are exercised by the directors either individually or by collectively (i.e., the Board). Following are few important of those:

Individual rights:

  • To call for Board meetings;
  • To send notice and attend Board meetings;
  • To vote the resolutions placed in the Board meetings;
  • To receive remuneration and sitting fees as permitted under law;
  • To inspect books of accounts of the company;
  • To inspect minutes of Board and committee meetings and shareholders’ meetings; and
  • To authenticate documents, represent legal proceedings, execute documents and to delegate powers on company’s behalf and under necessary Board's approval.

Collective rights:

  • Approval of annual accounts & Director’s report, prospectus and issue of securities;
  • Appointment of directors and key managerial personnel and their remuneration;
  • Appointment of auditors and fixing their remuneration;
  • Approval of corporate borrowings and investments upto certain limits;
  • Calling for shareholders’ meeting to seek approvals necessary for various corporate actions;
  • Declaration of interim dividend / recommendation of final dividend; and
  • Approval of issue shares or securities or buyback of securities upto certain limits.
29. Who is a Designated Partner?

The Limited Liability Partnership (LLP) Act, 2008 defines a designated partner as a person who is an individual or an entity that has entered into a partnership agreement with an LLP and is either the sole manager of the LLP or one of its partners.

30. Who can be a “Designated Partner”?

Every LLP shall be required to have at least two Designated Partners who shall be individuals and at least one of the Designated Partner shall be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.

31. What is the difference between Partner and Designated Partner as per LLP Act, 2008?

As per Section 2(q) of the LLP Act 2008, a “Partner”, in relation to a limited liability partnership, means any person who becomes a Partner in the limited liability partnership in accordance with the limited liability partnership agreement.

As per Section 2(j) of the LLP Act 2008, “Designated Partner” means any Partner designated as such pursuant to section 7. In regard to “Designated Partners”, Section 7 of the Act states:

  1. Every limited liability partnership shall have at least two Designated Partners who are individuals and at least one of them shall be a resident in India.
  2. In case of a LLP in which all the partners are bodies corporate or in which one or more Partners are individuals and bodies corporate, at least two individuals who are Partners of such limited liability partnership or nominees of such bodies corporate shall act as Designated Partners.
  3. Herein, “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one year.
32. What are the requirements in respect of “Designated Partners”?

Appointment of at least two “Designated Partners” shall be mandatory for all LLPs. “Designated Partners” shall also be accountable for regulatory and legal compliances, besides their liability as ‘Partners, per-se”.


This FAQ is a copyright of Swift. These FAQs are general in nature and based on the laws, rules and regulations as on July 2023. No reader should act based on any statement contained herein without seeking professional advice. The authors and Swift expressly disclaim all and any liability to any person who has read this FAQs, or otherwise, in respect of anything, and of any consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this FAQs.