Change of Director/Partner

A Company is an artificial person. Directors are generally appointed as per the applicable provisions of section 160 of the Companies Act 2013. The change in the directorship of a company is possible at any time as and when needed change can be either voluntarily or through demand. The demand arises in case there is a requirement of an expert in the board or death of an existing director or due to resignation. A director is appointed by the company or entity to manage the day-to-day operations of an organisation in accordance with the terms of the Companies Act, 2013.

Appointment & Qualification of Directors, Rules, 2014

• Check the articles of association: - The articles of association of the company will contain provisions regarding the appointment of Directors and removal of directors. Check the articles to determine the procedure for the appointment of a new director and the removal of an Old director.
• Hold a Board Meeting: - Notice to be sent to the directors regarding the agenda of the meeting at least 7 days prior to their respective registered addresses. A board meeting should be called to discuss the change of director.
• Hold a general meeting, not less than 21 days prior to the meeting date, all stakeholders must get notice of the general meeting. During such a general meeting, the appointment of a director is noted by adopting the necessary resolution.
• Pass a Resolution: - At the board meeting pass a Board Resolution to appoint a new director. The resolution should be passed by the required majority in accordance with the articles of association.
• Application for DIN: If the person to be appointed as the director does not have Director Identification Number (DIN) then apply for DIN by filing form DIR-3.
• Issue the Letter: - Issue the letter of appointment to the new director. Inform other parties. The change of director should be communicated to other parties, such as banks, auditors, and regulatory authorities, as required by law.
• E-form DIR-12:- File E-form DIR-12 within a period of 30 days of appointment. (Note: DIR-12 needs to be filled with a copy of CTC, Consent, and director’s letter of appointment).

• Form DIR-2:- Consent in writing to act as Director in Form DIR-2 as per Companies (Appointment & Qualification of Directors) Rules, 2014.

Qualifications for the appointment

• Only an individual or a person can be appointed as a director as per Section 149.
• A director must be a person of sound mind.
• Director must be a solvent person.
• He must not have been convicted of any offence by any court
• Only a real person may be appointed as a director
• Everyone will provide their approval to fulfill as a director on Form DIR-2 before or after his or her appointment.

Resignation of the Director (Section 168 of the Companies Act 2013)

Resignation of a director can be a significant event for a company, and it should be handled with care and attention to detail. Here are some steps that a company should take when a director resigns. The resignation of a director may be considered by him giving the company a notice in writing regarding the reasons for such resignation.

• Confirm the resignation: - The Company should first confirm the resignation in writing regarding the reasons for such resignation, requesting the director to provide a formal resignation letter. The letter should state the effective date of the resignation.
• Notify the board of directors: - The Board of Directors, on receipt of the notice given by the director, must present the same in the General Meeting to the shareholders so that they are informed of the same. The board can then decide on the necessary steps to take to fill the vacancy and ensure that the company's operations are not disrupted.
• The director will submit Form DIR–11:- The resigning director is required to file DIR-11 to ROC intimating about his resignation.
• Hold an AGM: - If the resignation of the director leaves the board with less than the required number of directors, the company should convene an annual general meeting (AGM) to appoint a new director.
• The Company must also file Form DIR–12:- The Company has to file DIR-12 within 30 days of the effective date of resignation.

Removal of a Director (Section 169 of the Companies Act 2013).

The process for the removal of a director, Section 169 of the Indian Companies Act, 2013, states the overall procedure for the director removal. The section gives shareholder a right to remove the director by passing a resolution in a general meeting.

• Call a board meeting: - The board of directors must be convened to discuss the removal of the director in question. Shareholders can remove the directors by passing an ordinary resolution in general meeting. Special notice of the intentions of removing directors is required to be given by the shareholders.

• Pass a resolution: - A resolution must be passed by the board of directors to remove the director A notice of the resolution for the removal of the director will be circulated to all the necessary persons at least 7 days prior to the meeting. The resolution must be properly recorded in the minutes of the meeting.
• Notify the director: The Company shall give intimation to the concerned director about his/her removal. The director must be given an opportunity of being heard.
• Appoint a replacement director: If necessary, a new director may be appointed to fill the vacancy left by the removed director.
• File Form MGT-14:- Every resolution is required to be filed within a period of 30 days of passing a special resolution in form MGT-14 with ROC.