Change in Directors

What is Change in Directors Overview

Directors are appointed by the shareholders of a Company for the management of a Company. As per Companies Law of 1956, a Private Limited Company is required to have a minimum of two Directors and a Limited Company is required to have a minimum of three Directors. On the other hand, a Limited Liability Partnership (LLP) has Designated Partners and Limited Liability Partnership Act, 2008 requires each LLP to have a minimum of two Designated Partners. Appointment or removal of a Director or Designated Partners maybe required due to various reasons. the expert can help you file the necessary filings to add or remove a Director from your Company or add or remove a Designated Partner from you LLP.

To add a Director or Designated Partner, Digital Signature must first be obtained for the proposed Director. Once, Digital Signature is obtained, the proposed Director can be added into the Company with the consent of the shareholders. To remove a Director from a Company or LLP, it is important to ensure the Company or a LLP would have the minimum required number of Director or Designated Partner after removal of the Director. If so, then the resignation letter along with the required form must be filed to effect the resignation of the Director.

Checklist /Minimum requirement for Change in Directors

1. Digital Signature

2. The director must have a DIN

3. Consent to act as a director in form DIR-2

In General Meeting or Extra Ordinary General Meeting

• Send notice to directors to call the board meeting

• Pass a board resolution to call General Meeting

• Send Notice to all the shareholders

• Pass resolution in AGM or EGM

• File form DIR-12 with MCA

Appointment of additional director

• Send notice to directors to call the board meeting

• Pass resolution for the appointment

• File form DIR-12 with MCA

• At the time of AGM, pass a resolution to regularize the additional director

• File form DIR-12 with MCA

Removal of director

A director can voluntarily resign from the company or a company can remove the director with a reasonable cause. But in either of the cases, the total number of directors must not be less than 2. If the company receives the letter of resignation then the company shall take a record of it by passing a board resolution. The director is deemed to have resigned from the date on which the company receives the notice from the director or the date specified if any by the director in the notice, whichever is later. The company has to file a form with MCA within 30 days of the resignation.

Removal of Director by shareholder

A company can remove its director before the expiry of the period offer by passing a shareholders resolution. The company must send the notice to all the members. Also, the company has to intimate the director about the removal. Such a director will have an opportunity of being heard. He may send his statement to the company and company may circulate it to the members. If the time period is short then such statement may be read in the general meeting. If members deem fit, they may remove the director by passing an ordinary resolution. The company must file the form for removal of a director with MCA within 30 days from the removal.

Process for Change in Directors

Director and shares held by directors

It is assumed that every director must hold shares of the company and so the new director is not added. But the fact is – it is not mandatory for every director to hold shares. Change in directorship is possoble adding a without offering the shares. Secondly, it is also assumed that if the director resigns from the company then he/she needs to surrender the shares. But it is not mandatory; such director can remain a shareholder in a company after leaving directorship.

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