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How to appoint/ induct Director in the Company & Partner in LLP?

August 17, 2020

Minimum 2 directors for Private Company & 3 for Public Company & minimum 2 Designated Partners for LLP are required.  One Person Company can have only 1 Director. Companies Act & LLP Act has specified qualifications/ disqualifications for appointment as Director/ Partner. There is also a provision for vacation of office on happening of certain event or attracting any disqualification by the Director/ Partner. Non maintenance of minimum directors leads to serious consonances consequence of shifting corporate liability to personal liability.

Every Director/ Designated Partner needs valid Director Identification Number (DIN) & digital signature (DSC) before getting inducted as such.

Proposal for appointment of Director/ Designated Partner is usually considered in the Board/ Partners Meeting and then confirmed by Shareholders in case of Company.  Unless otherwise stated by resolution or articles, 1/3 <super>rd</super> of directors in company are retired by rotation at every annual general meeting.

Under the Companies Act, director could be Whole time or Part Time or could be MD/ Executive/Non-executive. In the LLP Partner could be Executive or Non-executive or could be Designated Partner (DP) or otherwise. Appointing authority could decide the remuneration of Director/ Partner.

In the Company, a person could be appointed as Director without being Shareholder. In the LLP Designated Partner needs to be a partner with some % of sharing in profit/ loss.

Companies Act has specified certain mandatory duties for Directors to observe and LLP Act has specified liabilities of Partner.  Non adherence of duties leads to issues of serious non-compliances.

While Companies Act requires filing of specified returns by the Company to communicate appointment or changes in Directors, LLP Act requires amendment in LLP Agreement & its filing with MCA.

In order to understand in detail the process of induction of Director/ Designated Partner/Partner, his duties, rights & responsibilities and to design strategy for management of Company through Board of Directors or LLP through partners connect to our Biz Smart Executive