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Change in Directors-Addition/Removal

Change in Directors-Addition/Removal Procedure

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Addition/Resignation of a Director

A Director of a Company is a person that is elected by the shareholders to manage the affairs of the company as per the MOA and AOA. As the company is an artificial person it can only act through the agency of a natural person. Thus, a director has to be a living person and the management of the company is entrusted to its Board of Directors. The appointment of the Directors can be required from time to time based on the requirements of the shareholders of the business.

A Director in a company may want to resign or the Board of Directors may want to remove the Director for several reasons. The Director of a company can also resign from the Board by filing a resignation letter with the company and also intimating the ROC with the same. Here, we will take a look at the procedure that a director needs to follow in case he wants to resign from the post of Director.

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How to add a Director to a Company?

  • In a Private Limited Company, the Directors of the company play a crucial role in the functioning. The conduct of the business and the day-to-day decisions are made by the Directors. The Directors happen to be the key people in which the shareholders of the company trust to invest their money. In this article, we are going to discuss how a company can legally change and have new directors on board in India.

  • The first step is to obtain the consent of the proposed directors: The consent of the proposed director is necessary, according to form DIR-2 this is a very crucial document and the company is required to obtain the Form DIR-2 before proposing him to the Director of the Company.

    Digital Signature Certificates of the Proposed Directors: In case the proposed directors of the company do not have Digital signatures, they need to obtain a DSC. Apply for DSC now.

    Get the Director Identification Number (DIN): In case the Proposed Director does not have a DIN, then the company should apply for the DIN of the proposed person. This resolution is to be attached to the form DIR3. This DIN that is allocated once can be used for a lifetime. DIN can be obtained for any person who is above the age of 18. Also, the nationality of the proposed does not matter. Hence, the Indian Nationals, Non- Resident Indians, and Foreign Nationals can obtain the DIN and be appointed as Directors in a Private Limited Company in India.

    The Company should obtain all the KYC Documents along with the necessary educational qualifications documents as per the conditions of the job. Also, there is no minimum education qualification to hold the post of Director in the Company in India.

Director’s notice of resignation to the company

  • After giving notice in writing to the Company a Director may resign from a company. The Board is required to intimate the ROC of this notice within 30 days in the form of DIR-12. If the Director chooses, he can also send a copy of the resignation letter to the ROC along with the reasons for the resignation using Form DIR-11. Here is the format for the resignation letter of a Director:

  • A Company can remove its directors before the expiry of its term, these powers are vested with the shareholders. Here we will talk about the process of removing the Directors of a Company. In case of Non-compliance with any one of these processes can make the decision void, if appealed in a court.

    Basic Prerequisite

    This process of removing the Director cannot be initiated without providing an opportunity to the Director who is to be removed. This is one of the basic requisites on the laws ordained which provides the defendant or the defaulter an opportunity of being heard.

    Issuing Notice

    This process of removing Directors must be initiated by a notice. This notice should be processed by the shareholders that have a minimum voting power of 1% or someone who holds shares on which an aggregate sum of not more than Rs. 5,00,000 is paid upon the date of the notice. This is a special notice that should be signed by all the members. This special note should be delivered to the Company at least 14 days before the meeting is held at which resolution will be passed. The notice won’t be valid if isn’t issued before three months of the date of the meeting.

    Notice to Members

    The Director must be sent a copy of the Notice, who will be heard on the resolution at the meeting, whether the director is a member or not a member of the Company. The notice should be served at least seven days which is a week before the date of the meeting which is held.

    If the shareholders are not able to deliver the notice it can be published in any two newspapers, one in English and one in the vernacular newspaper. The notice must be mandatorily posted on the company’s website again this should be done seven days before the date of the meeting.

    Representation in writing

    The concerned director can make a representation against this removal notice. The director can request the company to send the representation to all the members. Also, the members should be notified of the representation by a notice. In case the company is not able to all the members the director may request for reading of this representation.

    Appeal to the Tribunal

    An application can be made to the tribunal if the organization or any aggrieved person decides against sending out the representation to the members or reading it out in the meeting, to request to nullify the process. The tribunal can also annul the process if it finds that the Director uses this right for unnecessary publicity for defaming purposes. This director is also given the right to issue an order demanding the director to cover the cost of the application borne by the company.

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Director Additin/Removal FAQ's

A company can remove the authority to remove a Director by passing an ordinary resolution that is given to the Director. A board meeting will be conducted by giving notice 7 days before all the Directors.

The ordinary resolution that is passed is not to be filed with the registered.

Yes, a Director of a company can be removed without his consent under certain circumstances.

For appointing a new director e-Form DIR 22 is to be filed.

No there is no requirement as such that the director needs to be amongst the shareholders. A person who has no shares can also be appointed as a Director in the Company.

Yes, there are certain protocols which are as follows: The proposed individual has to be a major He or she has to qualify under the law mentioned under the Companies Act,2013 The members of the board should agree to the appointment of the new director

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