ADD OR REMOVE DIRECTOR

INRODUCTION

Director’s control, direct and administer the entire company's business. They have a fiduciary duty to the company and its shareholders, which means to say that they are responsible for conducting the affairs of the company in a way that ensures success and profitability and thus enhancing the image of the company and its reputation.

ADDITION OF DIRECTOR

Addition of director is done by following the appointment procedure laid down under Companies Act, 2013 and Companies (Appointment and Qualification of Directors) Rules, 2014.

PRE-REQUISTES FOR BECOMING DIRECTOR

Following documents are required to be appointed as a director in a company-

• -Self-Attested PAN & Aadhar
• -Passport size photograph
• -Latest Bank statement as a address proof
• -Digital Signatures Certificate (DSC)
• -Directors Identification Number (DIN-by filling E-form DIR-3)

PROCEDURE OF APPOINTMENT OF DIRECTOR

1) Hold a Board Meeting and pass Board Resolution for following purposes: -

• -For appointment of director
• -To call the General Meeting for appointment of director
• -To authorise a director or any other person to issue notice of the General Meeting.
• -Issue notice of atleast 21 clear days of Geneal Meeting to shareholders, directors and auditors of company.

2) Hold the General Meeting and Pass an Ordinary Resolution for appointment of director.

3) Pass E-FORM DIR-12 within 30 Days of passing of the appointment with the following attachments-

• -Consent to become director(DIR-2)
• -Letter of appointment
• -Certified True Copy of the ordinary resolution passed in the General Meeting.
• -Certified True Copy of the board resolution passed in the Board Meeting.

RESIGNATION OF DIRECTOR (Section 168 of Companies Act, 2013)

• Give notice of resignation to the company
• Directors will hold a board meeting to acknowledge the resignation and provide the acceptance on the same.
• File DIR-12 with the Registrar of Companies with following attachments- -Resignation Letter -Certified True Copy of the Board Resolution -Letter of acceptance by the Board
• The director will submit E-FORM DIR-11 within 30 days of the resignation with the Registrar of Companies with attachment of Resignation Letter and Acknowledgment of acceptance of the resignation of the director.

REMOVAL OF DIRECTORS (SECTION 169 of Companies Act, 2013)

Send a notice to all shareholders for a board meeting within seven days from the date of the removal of a Director through Ordinary Resolution.

To remove a Director, a Company can follow these steps through an Ordinary Resolution, provided that the Director was not appointed by the Central Government or the Tribunal:

• Hold Board Meeting:
• Call a Board Meeting and giving seven days’ notice to all directors. In this notice, inform the directors about the intended removal of the Director.
• Call an Extraordinary General Meeting Resolution:
• During the Board Meeting, pass a resolution to convene an Extraordinary General Meeting (EGM). Additionally, pass a resolution for removing the Director subject to shareholder approval.
• Send EGM Notice to Members:
• Issue a notice for the EGM, ensuring a clear notice period of 21 days. Clear notice means a notice period of 21 days, excluding the day on which the notice is sent and the day of the meeting.
• Voting at EGM:
• Members are asked to vote on the resolution for the Director’s removal at the EGM. If the majority of members are in favour of the decision, the resolution is passed.
• Provide Opportunity for Director to Be Heard:
• llow the Director to be heard before passing the resolution. Allow them to present their case or provide an explanation.
• File E- Form DIR-11 and Form DIR-12 Submission:
• Following the passing of the resolution, submit Form DIR-11 and Form DIR-12 to the Registrar of Companies. These forms should include the attachments of the Board Resolution and Ordinary Resolution.
• Removal of Director Name from MCA:
• Upon approval of DIR-12 E-FORM, the Director’s name will be officially removed from the Ministry of Corporate Affairs website.

BENEFITS OF APPOINTMENT OF DIRECTOR

• No obligation of ownership
• The inadequacy of existing directors
• To comply with statutory requirements
• New talent in Company

REASONS OF REMOVING A DIRCETOR

• Incapacity (lost ability of taking a decision in sound mind)
• Illegal Conduct
• Acting against the interest of the company and stakeholders.

FREQUENTLY ASKED QUESTIONS(FAQ’S)

Q. What documents are required to become a director?

-Self-Attested PAN & Aadhar

-Passport size photograph

-Latest Bank statement as a address proof

-Digital Signatures Certificate (DSC)

-Directors Identification Number.

Q. Is holding general meeting mandatory for appointment as a director?

Yes, it is mandatory except in case of alternate director and additional director.

Q. What form is filed for appointment of director?

E-form DIR-12 is filed with the Registrar of Companies.

Q. What are the attachments of the E-from DIR-12?

-Consent to become director (DIR-2)

-Letter of appointment

-Certified True Copy of the ordinary resolution passed in the General Meeting.

-Certified True Copy of the board resolution passed in the Board Meeting.

Q. Is giving notice of resignation to company is mandatory?

Is giving notice of resignation to company is mandatory?

Q. What form is filed for the resignation of the director?

E-form DIR-12 with following attachments-

-Resignation Letter

-Certified True Copy of the Board Resolution

-Letter of acceptance by the Board

Q. Can the director of the company be removed during their term of office?

Yes, by passing an ordinary resolution and after giving him a reasonable opportunity of being heard.

Q. How long does it take to remove a director from the Company?

If you provide the complete information and there is no delay from the government end, then director can be removed in 15 days.

Q. At the time of removal of the director, is he required to sell/transfer his/her shares?

If the AOA provides for disposing of the shares at the time of removal of the director, only then the director is required to sell/transfer the share.

Q. How can a vacancy resulting from the removal of a director be filled under Section 169 of the Companies Act 2013?

As per Section 169 (5) of the Companies Act 2013, A vacancy resulting from the removal of a director, whether appointed by the company in a general meeting or by the Board, can be filled by appointing a new director at the same meeting where the removal occurs.

This requires providing special notice of the intended appointment, as per Section 169(2) of the Companies Act, 2013. The tenure of a newly appointed director extends until the same date that their predecessor would have held office if not removed