Add or Remove Director
Our experts can assist you with the secretarial procedures for appointing and removing directors under company law.
We handle everything from obtaining a DIN for a new director to wrapping up the legalities and removing a director!
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Need help with adding or removing directors?
Who is a Director?
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It is said that directors are the brain of the company. They control, direct and administer the entire company's business. Change of directors takes place – either by appointing a new director or by removing an existing director. The process of change of directors should always be handled by experts having the best interest of the company.
Table Of Contents
Overview
Board of Directors are a group of individuals who have expertise in varied fields and they are appointed by the shareholders to look after the day to day affairs of the company.
- Eligibility to be a director in the company
- Minimum 18 years of age (A minor cannot be appointed as director).
- Should not be disqualified as per the Company Act, 2013.
- The Board, the shareholders as well as the individual to be appointed as director must consent to be added as a director.
Related read: How To Choose Between A Private Ltd. Company And LLP?
- Every company has the power to get rid of their director before the expiry of his term if
- He/she is not properly discharging their functions.
- He/she is found to be disqualified as per the Companies Act.
- He/she is not attending the board meetings for more than 12 months.
- Has entered into contracts which are against the provisions of section 184 of the Companies Act.
- He/She is convicted for any offence by a court and imprisoned for not less than 6 months.
- Addition as well as removal of directors can only be done after taking permission from the shareholders of the company.
- Minimum & Maximum No. of Directors
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Company Type Minimum no. of Directors Maximum no. of Directors One Person Company 1 15 Private Company 2 15 Public Company 3 15 - However, by passing a special resolution (More than 75% voting in favour), one can appoint more than 15 directors in any of the above companies.
- Different categories of Directors
- Executive Director
- Non-Executive Director
- Managing Director
- Independent Director
- Residential Director
- Small Shareholder Director
- Women Director
- Additional Director
- Alternate Director
- Nominee Director
Benefits of Adding or Removing a Director
- New talent in Committee- Inputs of each department are required for the growth of business. A new director can bring in specialisation, innovation and efficient work ethics.
- No obligation of ownership- Directors are responsible for daily operations. The director does not require subscribing to share capital, so there is no obligation over ownership and voting rights of shareholders with the new director appointed.
- The inadequacy of existing directors- The Company needs to make sure that it is not suffering due to the inadequacy of the existing directors. There is a possibility that any existing director is not working efficiently after a certain period or due to their personal reason or old age. So it is important to either remove or add a new director, if any.
- To comply with statutory requirements- The minimum number of directors in a private limited company is 2. So in order to fulfill the statutory limit, the number of directors shall not reduce below the limit.
- Documents required for addition or removal of directors
- Photograph : Passport size photo of the Director.
- PAN Card: Self-attested PAN card of the Director.
- Proof of Residency : Aadhar Card/ Voter ID/ Passport/ Driving License of the Director.
- Digital Signature Certificate: DSC of the ongoing Director and Director to be eliminated/removed.
- Identity proof as mentioned above - Passport/Election card/Driving License/Aadhar card.
- Consent letter from Director
- Mobile number as well as personal and official email ID of the Director.
- It is mandatory to certify all the documents if the director is a non-resident of India.
- Notice of resignation filed with the company.
- Process of Addition or Removal of Director
- Day 1
- Consult - If change in directors is required or not.
- Collect - Basic Information and required documents.
- Apply - DSC (for director to be appointed).
- Day 2 – 4
- Draft - Necessary resolutions & required documents.
- Provide - Required documents provided after signature.
- Day 5 – 7
- Prepare - Online application.
- File - Application of changing directors.
- Share - Master Data from MCA with updated information.
How can we help you?
- In case of Addition of Director
- Amend AOA, in case the AOA doesn’t contain a provision to add director.
- To check whether the person is qualified to act as a director of the company as per the company law.
- Apply for the Digital Signature certificate of the Director.
- Apply for Director Identification Number (DIN).
- Verify the documents and prepare the requisite form to be filed with the ROC department.
- Call for a Board meeting, pass resolutions for appointment, prepare minutes report, issue appointment letters & make changes in GST registration.
Related read: An Overview On GST And 5 Ways GST Impacts Your Business
In case of Removal of director
- Issuing notice, conducting board meeting, passing resolutions, preparing minutes.
- Filing of various ROC forms.
FAQs
As per Companies Act, 2013, the administration does not have any right to reject the presented resignation of a director.
Yes, by passing an ordinary resolution and after giving him a reasonable opportunity of being heard. However, any director who has been appointed by National Company Law Tribunal u/s 242, is not subject to the provisions of section 169
If you provide us with complete information and there is no delay from the government end, then one can remove the director in around 15 days.
According to the Companies Act, only an individual can be appointed as a director. As a result, artificial legal persons like private limited companies cannot be appointed as a director.
Unless the Articles of Association prescribe for any such subscription, there is no requirement to subscribe for the shares of the company by the new director
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. Otherwise, there is no legal requirement for the director to sell/transfer his shares at the time of his/her removal.
Yes, non-resident or foreign nationals can be appointed as director in a company subject to at least 1 director in the company should be an Indian resident.
The consent should be taken from the Boards and its members and the company should comply with the statutory limit after addition or removal of the directors.
Speak to our experts who shall solve all your doubts.
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