Procedure for Changing Director in Company

Directors are appointed by the shareholders of a company for the management of a company. As per the companies law 1956, a Private Limited Company is required to have a minimum two directors and Limited company is required to have a minimum three directors. On the other hand, limited Liability Partnership has designated partners and Limited Liability Partnership Act, 2008 requires each LLP to have a minimum two Designated Partners.

Changing a company director means that either removing a director from the boards of the directors of the company or appointing a new director in the company as an additional director. Though such a changing may be made for some reasons diverse, this should be accordance with AOA of the company, provisions of the companies act 2013, and any service agreement available. Hence, registration or appointment of a director should be supported by proper legal process and documentation, and punctual intimation to the concerned ROC. Are you willing to change your company’s director or adding a new director? If yes, you have come to the right place. In this article, we are going to tell you what the procedure is for changing director in company.

Sections 169 of the companies act, 2013 talk about removal of a director by members:

Section 169 (1):

  • Ordinary resolution is required to remove a director from a company.
  • Director appointed by Tribunal under section 242 shall not be removed
  • Independent director if reappointed for second term shall not be removed by special resolution only.

Section 169 (2)

  • A special notice is required for a resolution to remove a director or to appoint somebody in his place.

Section 169  (3)

  • Company shall send the special notice along with the resolution of removal of director  and an opportunity of being heard is given to him at the meeting.

Section 169 (4)

  • If a concerned director wish to make representation, he shall give it in writing to the company and request to notify to its members.
  • Company shall not send the representation and shall not reading in the meeting, if tribunal is satisfied that right given under this section shall abused to secure needless publicity for defamatory matter.

Section 169 (5): Vacancy created by the removal of a director can be filled by appointment of another director at the same meeting.

Section 169 (6): Director so appointed in place of removal of a director can hold the office till the date up –to which removed director would have held office if he had not been removed.

Section 169 (7):

  • If vacancy is not filled in the same meeting, then it shall be filed as a casual vacancy.
  • Director removed cannot be reappointed in a casual vacancy.

Section 169 (8):  Director can be removed under any other provisions of the act.

Highlights of Changing Directors:

  • Obtain Consent of Proposed Director: Proposed Director should give his consent to act Director in the Company as per Form DIR-2, this is very important document and company must obtain form DIR-2 from before proposing him Director of the Company.
  • Digital Signature of the Proposed Director: If proposed director doesn’t have digital signature, he must obtain Digital Signature from certifying authority of India.
  • Obtain Director Identification Number: If a proposed director doesn’t have DIN, he should let the company that he doesn’t have, and then company in which he is about to appointed as Director is required to pass the Board Resolution for proposing him to be Appointed as Director of the company, the company apply for DIN  no of the proposed person. The resolution is required to be attached with Form DIR-3. (This is the new requirement for obtaining DIN, as new person cannot just apply for DIN if he is not to be appointed as Director in any company . DIN is only allotted once in the lifetime.

The company should obtain all KYC documents along with necessary educational qualification documents required as per terms job, it is important to note that there is no minimum qualification required to hold position of Director in the company in India.

  • Issue of Notice of General meeting: If the member of the company is wish to remove the existing director and add new director in the company, as per the companies act 2013, they are required to send the special notice of resolution to do so the company concerned. The first resolution concerns the removal of the director. The second resolution concern the  appointment of the director on his/her replacement. Note that special notice of the proposed director must also have given in order to be validly considered at the general meeting. If the director is not replaced. The second resolution will not be considered.

Hold extra ordinary general meeting of the company: The directors of the company are appointed in the general meeting, the company should issue the notice to all shareholders of the company for holding extra ordinary general meeting. Once the notice of EGM is issued to the shareholders. Now on the meeting date and time, hold the meeting and passed the resolution for appointment of new director in the company. If board fails to call EGM then shareholders shall call the EGM after the expiry of 45 days but within 90 days, from the date of receipt of the special notice and requisition by the Boards of Directors.

  • Issue letter of appointment: Now issue the letter of appointment to the director of the company, draft all terms and condition and responsibilities in the appointment director to maintain the transparency.
  • File Form DIR-12 to ROC:  ER Form DIR-12 is required to be filled pursuant to sections 7 (1) and © of the companies act 2013. Every person who has been appointed to hold the office of a director shall on or before the appointment furnish to company a consent in writing to act such Form NO. DIR-12. Every company, whether new of existing, is required to file a Form DIR-12 for particulars of its directors of the company with the Registrar, within 30 days from the date of the appointment /registration and of any change taking place in their designation.
  • Making necessary entries in registrar of directors: Company should make necessary entries in the Registrar of Directors and Key Managerial personal.
  • File necessary amendments application to GST, Tax authorities other regulators : The company is required to make necessary application for changes in directors details IN GSTN and other documents.

Final Say:

I hope now you understand the procedure of changing director. Still, in the event if you face any problem while changing a director of the company, you can get in touch with us. Unilex Business Consultant professionals will help you regarding the procedure of changing directorAs one of the  leading advisory consultant, we will help you regarding changing the director of the company. Feel free to contact us anytime through email address or phone number. We would happy to help you.

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