Change in Directors

Change in Directors- An Overview

Change in Directors under the Companies Act, 2013 means the process in which new directors are appointed to carry out the functions of the company. The change in directors of a company can happen for different reasons. However, formally the change in directors happens through making a specific resolution for appointment through the Articles of Association (AOA) of the Company.

The appointment and resignation of directors of a company will be governed by the provisions of the companies act, 2013. If there is a change in directors of the company, the same has to be stated in the Registrar of Companies (ROC).

Points to Remember before considering change in directors

• Private Limited Company- The minimum amount of directors in a private limited company is two.
• Public Limited Company- The minimum amount of directors in a public limited company is seven.
• Hence the company has to know the minimum amount of directors before going for change of directors.
• There are 15 directors allowed for a private limited company.
• Every director who is appointed as per the provisions of the Companies Act, 2013 has to have a Director Identification Number (DIN).
• Foreign directors are allowed to be appointed in both private and public companies.
• Any director who is removed formally from the board must secure an opportunity to be heard.
• The director who is resigning must submit the resignation letter to the board of directors. Within 30 days of resigning the director has to file Form DIR-11 to the registrar of companies.

How are directors appointed by a company?

The formal appointment of a director is governed by provisions relating to section 149(1) of the Companies Act, 2013. All companies require to have a director to comply with the rules of the law.

The director has the function to oversee, manage or direct the company to go in the correct direction.

For a public limited company, 2/3 rd of the shareholders appoint the director and the rest of the directors are appointed as per the provisions related to the articles of association of the company. The remaining portion of the directors represents 1/3 of the directors.

For a private limited company, the appointment is carried out by looking into the provisions prescribed by the articles of association of the company. If there are no provisions related to this then the appointment of the directors is carried out through the shareholders.

Eligibility Criteria for Appointment of Directors (Change in Directors)

The following criterion has to be sufficed for the appointment of directors:

How to change directors of a company in India (Change in Directors)

• An individual wanting to be appointed as a director of a private limited or public limited company must have a valid DIN (Director Identification Number).
• First and foremost an applicant wanting to be appointed as a director would have to make an application for DIN online through Form DIR-3.
• Apart from this, the director must have a Digital Signature Certificate (DSC). Hence an applicant must have a valid DSC to be appointed as a director.
• The following Documents have to be attached with Form DIR-3 for the appointment of director:

  • Passport Size Photograph

  • Valid ID

  • Residential proof of the Director

• The company has to convene a board meeting to consider the resolution for the appointment of directors.  In this the notice to approve the EGM for appointment of directors must be considered. The EGM has to be called after a period of 21 days notice.
• The EGM is convened and the resolution is passed for the appointment of directors. The following Documents have to be maintained by the director:

  • Attendance sheet of the EGM

  • Minutes of EGM

  • Proof of dispatch of the notice.

  • Copy of Notice to call EGM

• All the above information must be submitted along with DIR-12 to the ROC within 30 days of passing the resolution.
• The following details have to be included:

  • The Salary (CTC) of the Director

  • Any other interests in other entities in Form MBP-1

  • Residential Proof and ID

  • Consent Letter in Form DIR-2

  • Appointment Letter

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