Change in Directors

Directors are generally appointed as per the applicable provisions of the Companies Act 2013, by the shareholders of the company to ensure that the day to day operations of the company are executed in an efficient manner. 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.

The change in the directorship of a company is possible at any time as and when needed. The change can be either voluntarily or through demand. The demand arises in case there is a requirement of an expert in the board or due to resignation or death of an existing director.

Change in Directors and Related Procedure

The provisions of the Companies Act, 2013 read along with the Companies (Appointment and Qualification of Directors) Rules, 2014 sets down the procedure for the change in Directors.

Addition of a Director

• Board Meeting: 
  – Notice to be sent to the directors regarding the agenda of the meeting at least 7 days prior to their respective registered addresses. 
  – Pass a Board Resolution to call for a General Meeting where the appointment of the director can be made. 
  – Notice to be given to the shareholders regarding the particulars of the meeting, including the agenda, date, time and place of the meeting.
• Annual General Meeting/Extraordinary General Meeting: 
  Once the Board Meeting has taken place, the person so appointed to circulate the notice regarding the General Meeting (“GM”), may issue to the notice to all of the following: 
  – Directors 
  – Shareholders 
  – Auditors 
  The notice of the GM has to be given not less than 21 days prior to the date on which the GM is to be held. However, a shorter notice period can be given if and only if the consent is given by not less than 95% of the members who are entitled to vote at the meeting. The consent has to be obtained either through: 
  a) Writing or b) Electronic mode 
  At the GM, the resolution will be passed subject to the approval of the shareholders.
• Form DIR – 12 has to be submitted to the Registrar within 30 days from the appointment being made.
• Prerequisites to be a Director: 
  – DIN – DSC

Resignation of a Director (Section 168 of the Companies Act 2013)

• The resignation of a director may be considered by him giving the company a notice in writing regarding the reasons for such resignation.
• The Board of Directors, on receipt of the notice given by the director, must present the same in the General Meeting to the shareholders so that they are informed of the same.
• In the General Meeting, the fact regarding the resignation of the director must also be placed in the report of the directors laid before the shareholders.
• The Company must also file Form DIR – 12 with the Registrar within 30 days of the date of resignation.
• The effective date of resignation here will be the latest of: 
  – The date on which the notice is received by the company. 
  – The date specified in the notice.
• The director will submit Form DIR – 11 along with the prescribed fees including a copy of his notice of resignation and the detailed reasons for the same to the Registrar of Companies (“RoC”) in less than 30 days from the date of resignation.

Removal of a Director (Section 169 of the Companies Act 2013)

Removal only happens before the expiry of the director’s term. This can be made possible by passing an ordinary resolution at the General Meeting of the shareholders, but only after giving the director a reasonable opportunity of being heard. 

a) Notice of the resolution 
– A notice of the resolution for the removal of the director will be circulated to all the necessary persons at least 7 days prior to the meeting. 
– Where the notice cannot be delivered due to unavoidable circumstances:- 
1. It can be published in the newspapers. (One in English and the other one in the regional language) 
2. The notice must be posted on the company’s website. 
– Once this notice is received, the company shall send a copy to the concerned director. 
– He will be entitled to be heard at the General Meeting where the resolution is to be passed.

b) Written Representation 
– A representation against his removal may be made in writing by the director. 
– He may further request that the representation be circulated to all the members. 
– A notice regarding the same will have to be issued to the members. 
– Where circulation is not possible, he may request it to be read at the meeting.

C) Filing with the ROC 
Form DIR – 12 has to be filed with the Registrar within 30 days from the date of resignation of the director along with the prescribed fees and the necessary attachments.

Form DIR – 12

This form has to be filed with the particulars of appointment of directors and key managerial personnel and the changes among them. The details mentioned below have to be entered in: 
– Details of the company. 
– Details regarding the number of directors, managers etc. 
– The date of cessation or the date of appointment, as the case may be. 
– Respective DINs and DSCs to be affixed wherever necessary. 
Attachments: 

• Declaration of the director to be appointed.
• In case of removal/resignation-
  • Notice of resignation.
  • Evidence of cessation.
• Any other optional attachments.

Form DIR – 11

This form is to be filled for the purpose of giving notice of resignation of the director to the Registrar. The following details have to be entered in:

• Details of the company.
• DIN of the resigning director.
• Date of filing the resignation with the company.
• Reasons for the resignation.
• Attachments:
  • Notice of resignation filed with the company.
  • Proof of dispatch.
  • Acknowledgement received from the company if any.
  • Any other optional attachments.

Although the company goes on, credit to the perpetual succession and separate legal entity features, it has to abide by the provisions of the Companies Act, 2013, and the specified rules by filing the relevant forms within the stipulated time with the relevant authorities.

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