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Change in Directors in a Company – Appointment and Removal of Directors

Appointment and removal of directors : Directors are a very important pivot, perhaps the most important pivot of a Company. Shareholders appoint them to manage the affairs of the Company. They have specific functions, duties and powers. Chapter XI of the Companies Act,2013 contains the provisions for change in Directors i.e. their appointment, resignation and removal.

 

1. Appointment of a Director

Wherever the Articles of Association permit, the existing Board of Directors can appoint other Additional directors‘ who can hold office till their confirmation at the next meeting of shareholders. However, in all other cases, shareholders have the sole authority to appoint Directors in general meeting. Further,  there are some categories of directors like nominee directors/ regulatory directors who are not appointed by shareholders.

The director, proposed to be appointed, should declare that he or she is free of all disqualifications which are mentioned under Section 164. Further, he should give his consent in forms DIR -2 and DIR -8 and disclosure of interest in MBP-1.

Before appointment, a director should obtain a Director Identification Number (DIN).

Company shall file Form DIR -12 with the Registrar of Companies within 30 days of the director’s appointment. Form DIR-12 is the general form to be filed for all change in directors.

2. Resignation of a Director –

Section 169 of the Act governs a situation of resignation of a Director. On receipt of the notice/letter of resignation, Company has to file DIR-12 within 30 days.

Also, the resigning director may, at his option, submit DIR -11 also.

 

3. Re- designation of director

Re-designation of a Director can happen when:

  1. When a Director is re-designated from an executive/whole time to non- executive director or vice -versa OR
  2. shareholders confirm the additional director’s appointment in a general meeting.

Re-designation is not actually a change in Director but its more a change in post. But even In such cases, Company has to file DIR -12 within 30 days of such re-designation.

 

4. Alternate Director

In case of a foreign director not visiting India for a year, he/she has to appoint an ‘Alternate Director’ as a proxy director for receiving notices, attending meetings and voting.

Company shall file DIR-12 for appointment and removal of an Alternate Director within 30 days of such an event.

 

5. Removal of Director

Section 169 of the Companies Act, 2013 governs removal of a Director.

  • A company may, by ordinary resolution, remove a director, after giving him a reasonable opportunity of being heard.
  • This process is carried out at a general meeting of shareholders.
  • Such resolution, to remove a director under this section, or to appoint somebody in place of a director so removed, at the meeting at which he is removed shall have an attachment as a Special Notice which shall lay down the reasons for removal and any written representations made by the Director.
  • The Board/ shareholders calling the meeting shall provide the Director, proposed to be removed, an opportunity to be heard on the matter.
  • Note the requirements of minimum number of Directors. If the removal of Directors involve bringing it below the minimum required levels, then new director may have to be appointed before removing an old Director.

 

Professionals with the Corporate compliance team at Entrecap Business Services has undertaken all assignments mentioned above, pertaining to change in Directors i.e. their appointment, resignation, re-designation and removal.

We shall be happy to place our professional expertise and experience at your service.

You can also checkout compliance checklist for a newly incorporated Company here.

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