Get finest directors on board with change of directors
Directors are considered the brain of the company, serving as the key managerial personnel who oversee and manage its operations. Changes in the board of directors occur through either the appointment of new directors or the resignation of existing ones. The goal of such changes is to maintain an optimal mix of expertise for the company’s best interests.
The Board of Directors (BoD) holds the authority to approve a director’s resignation, while appointments require the consent of the shareholders. Regardless of whether it is an appointment, removal, or resignation, the change only takes effect once it is officially notified to the Ministry of Corporate Affairs.
As a business grows, effective planning requires input from all departments to shape strategies and form alliances. Introducing a new product line or department may call for hiring an expert to lead the team in a managerial role as a director. This brings specialization and targeted leadership, benefiting the company’s overall performance.
Directors handle the day-to-day operations of the company. By appointing an additional director, shareholders can delegate operational responsibilities while retaining strategic control. Since directors are not required to subscribe to share capital, bringing a new director on board does not affect ownership or dilute shareholders’ voting rights.
Existing directors may step down due to retirement, personal reasons, or unforeseen circumstances such as death. In such cases, the company must ensure that its operations remain uninterrupted by processing both the director’s resignation or removal and, if needed, appointing a new director to fill the vacancy.
The Companies Act has prescribed the minimum number of directors in any company, which is 2 and 3 for Private and Public company respectively. At any time during the company’s existence, the number of directors shall not reduce below from the limit. The company must appoint a new director(s) within 6 months if the number reduces below 2/3.
Passport size photograph of the director to be appointed
Self-attested PAN card of the director to be appointed
Aadhar Card/ Voter ID/ Passport/ Driving License director to be appointed
DSC of the continuing director and director to be removed
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Minimum 3 directors all time
Minimum 2 directors all time
Minimum 1 director all time
*Subject to Government processing time
If the total number of directors falls below the prescribed limit, the company must appoint a new director(s) within 6 months of the removal, resignation, or death of the outgoing director to meet the statutory requirement.
To be appointed as a director, an individual must be a legal adult and meet the eligibility criteria under the Companies Act, 2013. Additionally, the appointment must be approved by the company’s members.
No, a new DIN is not required. It is a one-time allotment and can be used for all future appointments in any company or LLP.
Directors are generally not required to subscribe to shares. However, if the company’s Articles of Association (AoA) specify such a requirement, it must be fulfilled as a condition for their appointment.
Only an individual can be appointed as a director in a company. Therefore, if an LLP or a company wishes to be involved in the board, it can do so only through an appointed individual representative.
Yes, an NRI or foreign national can be appointed as a Director of a Private Limited Company after obtaining a Director Identification Number (DIN). However, at least one director on the Board must always be an Indian resident following the company’s incorporation.
To remove a director from a company, the board must call a meeting of the members to seek their consent after serving a special notice about the removal. The director facing removal must be given a chance to present their case.
After a director submits their resignation to the company and MCA, the company must notify MCA of the change by filing the required e-form within 30 days. Additionally, the company must fill the director’s vacancy as per regulatory requirements.
No, a person can still hold shares in the company even after their tenure as director ends. However, if the Articles of Association (AoA) require share subscription as a condition for appointment, those shares must be disposed of according to the procedure outlined in the AoA.
The company’s shares must be transferred by executing a Share Transfer Deed and affixing stamps according to the rates specified in the Stamp Act of the relevant state.
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