What is Change in Directors Overview
Directors are appointed by the shareholders of a Company for the management of a Company. As per Companies Law of 1956, a Private Limited Company is required to have a minimum of two Directors and a Limited Company is required to have a minimum of three Directors. On the other hand, a Limited Liability Partnership (LLP) has Designated Partners and Limited Liability Partnership Act, 2008 requires each LLP to have a minimum of two Designated Partners. Appointment or removal of a Director or Designated Partners maybe required due to various reasons. MeraProfit can help you file the necessary filings to add or remove a Director from your Company or add or remove a Designated Partner from you LLP.
To add a Director or Designated Partner, Digital Signature must first be obtained for the proposed Director. Once, Digital Signature is obtained, the proposed Director can be added into the Company with the consent of the shareholders. To remove a Director from a Company or LLP, it is important to ensure the Company or a LLP would have the minimum required number of Director or Designated Partner after removal of the Director. If so, then the resignation letter along with the required form must be filed to effect the resignation of the Director.
Process for Change in Directors
01
In General Meeting or Extra Ordinary General Meeting
- Send notice to directors to call the board meeting
- Pass a board resolution to call General Meeting
- Send Notice to all the shareholders
- Pass resolution in AGM or EGM
- File form DIR-12 with MCA
02
Appointment of additional director
- Send notice to directors to call the board meeting
- Pass resolution for the appointment
- File form DIR-12 with MCA
- At the time of AGM, pass a resolution to regularize the additional director
- File form DIR-12 with MCA
03
Removal of director
A director can voluntarily resign from the company or a company can remove the director with a reasonable cause. But in either of the cases, the total number of directors must not be less than 2. If the company receives the letter of resignation then the company shall take a record of it by passing a board resolution. The director is deemed to have resigned from the date on which the company receives the notice from the director or the date specified if any by the director in the notice, whichever is later. The company has to file a form with MCA within 30 days of the resignation.
04
Removal of Director by shareholder
A company can remove its director before the expiry of the period offer by passing a shareholders resolution. The company must send the notice to all the members. Also, the company has to intimate the director about the removal. Such a director will have an opportunity of being heard. He may send his statement to the company and company may circulate it to the members. If the time period is short then such statement may be read in the general meeting. If members deem fit, they may remove the director by passing an ordinary resolution. The company must file the form for removal of a director with MCA within 30 days from the removal.
05
Director and shares held by directors
It is assumed that every director must hold shares of the company and so the new director is not added. But the fact is – it is not mandatory for every director to hold shares. Change in directorship is possoble adding a without offering the shares. Secondly, it is also assumed that if the director resigns from the company then he/she needs to surrender the shares. But it is not mandatory; such director can remain a shareholder in a company after leaving directorship.
Checklist /Minimum requirement for Change in Directors
- Digital Signature
- The director must have a DIN
- Consent to act as a director in form DIR-2
FAQs On Change in Directors
While carrying change in the board of directors, the company must obtain consent from its Board and members, as required by passing a resolution. Further, the care must be taken that the number of directors does not fall below the statutory limit after removal or resignation.
If the total number of directors is less than the number prescribed, the company shall appoint a director(s) in the company to fulfill the requirement within 6 months from removal/resignation/death of the concerned director.
A Private Limited Company must have a minimum of two Directors at all times. A Limited Company must have a minimum of three Directors at all times.
A Digital Signature, Signed Affidavit from the proposed Director and information about the identity and address of the Director is required.
A Company can remove a Director by passing an ordinary resolution in an Annual General Meeting or an Extraordinary General Meeting. Ordinary resolutions can be passed by a simple majority. Once a resolution is passed, the Company must file the Resolution along with the necessary forms to the Ministry of Corporate Affairs to remove a Director.
A new Director can be added to the Board of Director by passing an ordinary resolution in an Annual General Meeting or an Extraordinary General Meeting. Ordinary resolutions can be passed by a simple majority. Once a resolution is passed, the Company must file the Resolution along with the necessary forms and the Digital Signature of the Managing Director or Secretary of the Company, to the Ministry of Corporate Affairs to appoin
Yes, a director can voluntarily resign. The notice of resignation must be served to company stating reason of resignation. Also, the resigning director needs to file a form for intimation to MCA about his resignation from company.
An individual to be added as a director must be major and qualified under the Companies Act, 2013. For the appointment, the consent of the members is also required.
No, you are not required to obtain another DIN. It is permanently allotted and can be used for a person’s subsequent appointment in any company/LLP.
There is no requirement to subscribe the shares by the director. However, if the Articles (AoA) of the company prescribe for any such subscription, it must be fulfilled as a condition for his appointment.
Only an individual can act as a director in the company. Hence, if any LLP or Company is willing to be added as a director in the company, only its representative may act as the director.
Yes, an NRI or Foreign National can be a Director of a Private Limited Company after obtaining Director Identification Number. However, at least one Director on the Board of Directors must be an Indian Resident any time after company incorporation.
In order to remove a director from a Company, the directors shall conduct a meeting of members for their consent after serving special notice in this regard. The exiting director must be given an opportunity to represent his grounds.
Once the director has filed his resignation with the company and MCA, it is the responsibility of the company to intimate the change to MCA. The requisite e-form is required to be filed within 30 days from the resignation. Further, the vacancy of the director is also required to be filled as per the requirement.
No, even after the end of the tenure as director, a person can hold the shares in the company. However, if the shares in the company are subscribed as a condition to appointment as provided by AoA, the shares are also required to be disposed of in the manner provided in AoA.
The shares of the company shall be transferred by way of executing the Share Transfer deed and by affixing the stamps as per the rates mentioned in the Stamp Act of the concerned State after the change.
As per Section 149 (1) (a) second proviso requires certain categories of companies to have At Least one woman director on the board. Such companies are any listed company, and any public company having-
