Particulars of Appointment of Directors and the Key Managerial Personnel and the Changes among them [Form DIR-12]

Introduction:

On 5 November 2017, the Ministry of Corporate Affairs directed that it has struck down around 2.24 lakh shell companies that were considered inactive by the government of India. This step was said to be taken because most of these companies were not filing their annual returns, financial statements, etc as per the Companies Act of 2013, and therefore these companies were struck off from the Registrar of Companies.[1]

Through this process, it was decided that those companies incorporated before 21 December 2017 will have to file a form in which it has to register its details and office regarding details, and those companies complying with this rule and filling its necessary details will be considered as an active company. and those companies who do not register will be considered as active non-compliant companies.[2] These changes were brought under rule no. 25A of companies (incorporation) amendment rules, 2019.[3]

What is form number DIR-12?

DIR-12 is an e-form that is required to be filed by the companies with the registrar within 30 days for fulfilling three major cases, based on directors and the key managerial personnel:-

• Appointment of new directors or KMPs
• Resignation of existing directors or KMPs
• Change in designation of an existing director or KMPs

The form DIR-12 has to be filed in accordance with, Section7(1)(c), 168, and 170(2) of the Companies Act of 2013 and Rule 17 of Companies (Incorporation) Rules, Rule 8, 15, and 18 of the Companies (Appointment and Qualification of Directors) Rules, 2014.[4]

A single e-form can be submitted for the Appointment, Resignation, or change in Designation of Existing Director. For example, let’s assume A is appointed as a director on 1 June, B is appointed as a director on 12 June, and C as a director wishes to resign from the company on 14 June. In such a case, the form can only be filed on or before 1 June, as all the events fall within 30 day period therefore details regarding all the three changes can be filed through the same form DIR-12. However, if the company files the DIR-12 form on or after 8 July, then Director A will have to file the DIR-12 form separately.

Laws governing Form DIR-12

Companies Act of 2013

1. Section 7(1)(c) – This section of the Companies Act of 2013 talks about “Incorporation of the company”. Section 7 (1) says that a company should file documents and information for registration with the concerned registrar of companies within its jurisdiction, where the office of the company is situated. Section 7(1)(c), talks about an affidavit from subscribers and first directors. It says that an affidavit from subscribers and first directors if any, and an article that he is not convicted of any offense in connection with the promotion, formation, or management of any company, or that he is not found guilty of any fraud or any breach of duty to any company under Companies act, 2013 or any previous company law during the preceding five years and it also says that all the documents and information regarding registration filed with the RoC for registration of the company should be correct and complete.[5]
2. Section 170(2) – This Section talks about, “Register of directors and key managerial personnel and their shareholding”. This section says that a return containing such particulars [as explained in section 170(1)] and documents as may be prescribed, of the directors and the key managerial personnel, should be filed within thirty days from the appointment of every director and key managerial personnel with the Registrar of Company (RoC), and also if in case, any changes taking place within thirty days also shall be registered.[6]
   Exceptions: Some exceptions for the following section are:
   1. Section 170 does not apply to a government company where the entire paid-up share capital is held by the central or state government.[7]
   2. This exception is only applicable to government companies that have not committed any default in filing their financial statements under section 137 and Section 92 of the Companies Act of 2013.[8]
   3. Section 170(2) in case of, a Specified IFSC public company, instead of the words ‘thirty days’, ‘sixty days’ shall be read at both the places.[9]       

Companies (Incorporation) Rules, 2014

Rule 17 – This rule specifies the particulars of the first directors of the company and their consent to act as such. The rule further specifies that the particulars of each person mentioned in the articles as first directors of the company and his interest in other firms or corporate bodies along with his consent to act as director of the company shall be filed via form DIR-12 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.[10]

Companies (Appointment and Qualification of Directors) Rules, 2014

1. Rule 8 – This particular rule talks about ‘the need for consent to act as director’. It further specifies that every person who has been appointed to hold the office of a director is obliged to furnish his/her consent to the company in writing before or after the appointment as such in Form No. DIR-2:  
   It further says that the company shall, within thirty days of the appointment of a director, file such consent with the Registrar of Companies (RoC) through Form No. DIR-12 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.[11]  
2. Rule 15 – This particular rule talks about, ‘Notice of the resignation of director’. It further states that the company within 30 days from the date of receipt of notice of resignation from a director, should intimate the Registrar through Form DIR-12 and should post the information on its website regarding the same.[12]  
3. Rule 18 – This specific rule talks about, ‘return containing the particulars of directors and the key managerial personnel’. It says that a return containing the particulars of appointment of directors or key managerial personnel and changes therein should be filed with the Registrar of Companies through Form DIR-12 along with fees as provided in the Companies (Registration Offices and Fees) Rules, 2014 within thirty days of such appointment or any change.[13]

The procedure of filing for DIR-12

1. Step one is to download the e-form from the Ministry of Corporate Affairs portal, which is free of cost.
2. Step two is to fill the column, Corporate Identity Number of the company (CIN). Users can use the pre-fill option which automatically fills columns given below namely, name of the company, address of the registered company, and the email address of the company.
3. Step three is to fill in the numbers of the managing director and details regarding the same below it for which the form is being filled.
4. Step four is to fill in all the necessary details thereafter, regarding the number of managers, secretary, chief financial officer, etc. The important thing to note is if the total number of above-mentioned managers etc is more than fifteen, then one should file another e-form DIR-12 for the remaining.[14]
5. Step five is to attach all the relevant documents.
6. In the next step, one should digitally sign, and go through the form if any errors, and then submit the form. The required fees have to be paid while uploading the form and one should also note down the SRN number which has been generated for future references.
7. One should mandatory fill the fields marked in (*).

Attachments required in the form

In case of appointment

1. If an appointment of a Director, Manager, Company Secretary, CEO, CFO has to be performed then in that case:
   • Letter of appointment has to be attached.
   • Form no. DIR-2 has to be attached.
2. If the number of entities entered is more than one, then the interest of the Director on other entities has to be attached.
3. In case of a new company then declaration by the first Director of that company has to be attached by filling form INC-9.
4. Note: In case, if there are no Directors in the company then the company can appoint one director through the consent and signature from both promoters and shareholders of the particular company by registering with the ROC through form DIR-12, and then that Director can file a DIR-12 form to appoint other Directors for the said company.[15]  

In case of resignation

Section 168 of the Companies Act of 2013 states the resignation of a Director and Section 169 of the Companies Act of 2013 states removal of a Director.

In case of cessation of a Director, Manager, Company Secretary, CEO, CFO:

• Notice of resignation has to be attached.
• Evidence of resignation has to be attached.

In case of any other information then it can be provided as an optional attachment

Some Legal cases relating to appointment, resignation, and changes in KMPs and the Directors

In the Gorukanti Rao V. Registrar Of Companies[16] case, Gorukanti was according to ROC, director of 21 companies that violated Section 165(1) of the Companies Act of 2013. The applicant clearly stated that he already had notified the said company which he was the director when he resigned making him director of 20 companies and within the purview of law, but the company failed to file Form DIR-12 which was important as per the law. Even though the said company filed form MGT-7, but that also was filed beyond the date of the filing date. This clearly shows us the importance of the DIR-12 form when it comes to the resignation, change, or appointment of any KMPs of Directors for a company.

In the ROC V. Narsingh Singh[17] case, the same thing happened as above stated case, that the accused didn’t notify the ROC regarding his resignation from the company, and the ROC then filed a case U/s 165(6) of the Companies Act for the contravention of Section 165(3) of the Companies Act of 2013. The court also said that even if the said company has not informed the ROC within the stipulated period of such resignation, the Director (as an obligation and duty) should have informed the ROC of his resignation from the company and was liable for the said offense.

Conclusion

We can conclude by saying that filing a DIR-12 form is of the utmost importance if the company has to appoint, resign or change any KMP or Director. The companies filing it and the Directors or others who are part of it should have some basic understanding of the law and should not fail to file it as per the stipulated time period. The important thing that we can learn from the above-mentioned cases is that even if the company who have not filed for the resignation of a said Director to the ROC, even after he/she has filed his/her resignation to the company then it should be the said Director’s duty to inform the company and the ROC regarding the same. 

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References:

[1] Govt cancelled 2.24 lakh suspected shell companies post demonetisation, disqualified 3.09 lakh directors, Firstpost (July. 28, 2021, 5:38 PM), https://www.firstpost.com/business/govt-cancelled-2-24-lakh-suspected-shell-companies-post-demonetisation-disqualified-3-09-lakh-directors-4194085.html. 

[2] Amit Popli, knowledge series 9 -Form-DIR-12, (July. 28, 2021, 5:54 PM), https://www.youtube.com/watch?v=WY6nuzOAlMU.

[3] The Companies (Incorporation) Amendment Act, (2019).

[4] Form DIR-12, Ministry of Corporate Affairs (July 28, 2021, 6:00 PM), https://www.mca.gov.in/MinistryV2/companyformsdownload.html.

[5] Companies Act, S. 7(1)(c), (2013).

[6] Companies Act, S. 170(2), (2013).

[7] Section 170 of the companies act, 2013-register of directors and key managerial personnel and their shareholdings, Corporate law report, (August. 2, 2021, 9:09 PM), http://corporatelawreporter.com/companies_act/section-170-of-companies-act-2013-register-of-directors-and-key-managerial-personnel-and-their-shareholding/.

[8] Ibid.

[9] Ibid.

[10] Companies (Incorporation) Rules, R.17, (2014).

[11] Companies (Appointment and Qualifications of Directors) Rules, R. 8, (2014).

[12] Ibid, R. 15.

[13] Ibid, R.18.

[14] Laxmi Navlani, DIR-12 Form: appointment or change or resignation of directors or KMPs, Quiko (July 28, 2021, 8:00 PM), https://learn.quicko.com/dir-12-form-appointment-or-change-or-resignation-of-directors-or-kmps

[15] Popli, Supra note 2.

[16] Gorukanti Rao v. ROC, CP NO. 191/441/HBD (2019).

[17] ROC v. Narsingh Singh, India Kanoon, (July 28, 2021, 10:00 PM), https://indiankanoon.org/doc/153674558/.