Appointing a Whole-time Director in a Private Limited Company (India)
Introduction
The Companies Act, 2013 (the Act), along with relevant rules, governs the appointment of a Whole-time Director (WTD). For Private Limited Companies, specific exemptions simplify the process significantly, primarily eliminating the need for shareholder approval for the appointment and related remuneration (unless the Articles of Association stipulate otherwise).
A Whole-time Director is a director in the whole-time employment of the company.
Pre-Appointment Checklist
Before the formal appointment, ensure the following steps are complete:
| Requirement | Details |
| Director Identification Number (DIN) | The proposed WTD must possess a valid DIN. |
| Digital Signature Certificate (DSC) | Required for e-filing. |
| Consent & Declaration | Obtain Form DIR-2 (Consent to act as Director) and a declaration (often in Form DIR-8) that the person is not disqualified under Section 164 of the Act. |
| Check Articles of Association (AoA) | Ensure the AoA grants the Board the power to appoint a WTD and does not mandate a shareholder resolution for the appointment or remuneration. |
Meeting and Resolution Timelines
The appointment is primarily executed through a Board Resolution. Unlike public companies, the Central Government Exemption Notification for Private Companies (dated June 5, 2015, and subsequent amendments) exempts them from the requirements of:
- Section 196(4) and 196(5) (requiring approval by a resolution at the next General Meeting).
- Section 197 and Schedule V (relating to maximum managerial remuneration limits and conditions).
| Step | Meeting Type | Timeline | Compliance Requirement |
| 1. Board Meeting | Board of Directors Meeting (BM) | Give notice at least 7 days before the BM date. A shorter notice is permissible if at least one independent director is present (not applicable to a private company unless it voluntarily appoints one). | Board Resolution is passed for the appointment of the WTD and approval of the terms of appointment (including remuneration). |
| 2. Appointment | - | Date of passing the Board Resolution is the date of appointment (unless the resolution specifies a future date). | Issue Appointment Letter/Enter into Service Agreement outlining the terms and conditions. |
Statutory Filing Forms and Timelines
The company must file the appointment details with the Registrar of Companies (ROC) within the prescribed time limits.
| E-Form | Purpose of Filing | Section | Filing Deadline (from date of appointment) |
| DIR-12 | Particulars of appointment of Director/KMP. | Section 170(2) read with Section 173 and Rule 17 of the Companies (Appointment and Qualification of Directors) Rules, 2014. | 30 days |
| MGT-14 | Filing of Resolution(s) with the ROC. | Section 117(1) | 30 days |
Key Clarification on MGT-14:
While MGT-14 is generally required for Board Resolutions passed under Section 179(3) for most matters, the appointment of a WTD by a Private Limited Company is typically an item under Section 179(3)(k) ("to appoint a managing director, whole-time director or manager"). Therefore, an MGT-14 is required to be filed for the Board Resolution appointing the WTD.
| Form MR-1 | A key exemption for private companies is that they are not required to file Form MR-1 (Return of appointment of Managing Director, Whole-time Director or Manager) under Section 196, as the entire Section 196 (4) and (5) dealing with shareholder approval and filing is exempted. |
Summary of Post-Appointment Compliances
In short, the immediate statutory filings for a Private Limited Company appointing a Whole-time Director are:
- Form DIR-12 (within 30 days of appointment).
- Form MGT-14 (within 30 days of the Board Resolution).
- Update Statutory Registers: Make necessary entries in the Register of Directors and Key Managerial Personnel (Section 170) and other relevant records.
The maximum term for the appointment of a WTD is five years at a time, with re-appointment possible not earlier than one year before the expiry of the current term (Section 196(2)).