How to change a Director of a Company in India? – A complete guide

Introduction

Directors are appointed by a company’s shareholders to manage the company. According to the Companies Act of 1956, a Private Limited Company must have a minimum of two Directors, while a Limited Company must have a minimum of three Directors. Appointing or removing a Director or Designated Partners maybe necessary for a variety of reasons. Today’s article will cover information on changing in director of a company in India under the Companies Act, 2013, as well as a brief process on “How to Change a Director of a Company in India?”

Overview of change in director of a company

Under the Companies Act of 2013, a change in directors is the process by which new directors are appointed to conduct the functions of the company. A company’s board of directors may change for a variety of reasons. However, the change in directors is formalized by passing a specific resolution for appointment through the Company’s Articles of Association (AOA).

A change in a company’s directorship is possible at anytime as needed. Change can occur either voluntarily or on demand. The demand arises when there is a need for an expert on the board or when an existing director resigns or dies.

The provisions of the Companies Act, 2013, govern the appointment and resignation of directors of a company. If the company’s directors change, the change must be reported to the Registrar of Companies (ROC).

Points to keep in mind at the time of change in a director of a Company

• The total number of directors that is allowed in a Private Limited Company is 15.
• Every director appointed in accordance with the provisions of the Companies Act of 2013, must have a Director Identification Number (DIN).
• Foreign directors are permitted to serve in both Private and Public Limited Companies.
• Any director who is formally removed from the board must be given an opportunity to be heard.
• The resigning director must submit a resignation letter to the board of directors. The director must file Form DIR-11 with the registrar of companies within 30 days of resigning.

How to change a Director of a Company in India?

The Companies Act, 2013, read in conjunction with the Companies (Appointment and Qualification of Directors) Rules, 2014, establishes the procedure for a change in Directors.

When there is a addition in a Director of a Company:

1. Board Meeting

• The agenda for the meeting must be sent to the directors at least 7 days in advance to their respective registered addresses.
• Pass a Board Resolution calling for a General Meeting at which the director will be appointed.
• The shareholders must be given notice of the meeting’s specifics, including the agenda, date, time, and location.

2. Annual General Meeting or EGM (Extraordinary General Meeting)

• After the Board Meeting, the person designated to distribute the notice of the General Meeting (“GM”) may send the notice to all of the following:
  • Auditors
  • Shareholders
  • Directors
• The notice of the general meeting must be given at least 21 days before the date of the meeting. However, a shorter notice period maybe given if and only if the consent of at least 95% of the members entitled to vote at the meeting is obtained.
• Consent must be obtained in one of two ways:
  • Electronic mode
  • Writing (Offline)
• The resolution will be passed at the general meeting, subject to shareholder approval.
• Within 30 days of the appointment of a director for a company, Form DIR – 12 must be submitted to the Registrar.

Insights on Form DIR – 12

The following information must be mentioned:

• Company information.
• Details on the number of directors, managers, and so on.
• The date of termination or, if applicable, the date of appointment.
• DINs and DSCs must be affixed where applicable.

Documents that are needed to be attached:

• Director declaration that needs to be appointed
• If there is a removal or resignation of a director:
  • Resignation letter
  • Proof of cessation
  • Any additional optional attachments

When a director is resign from a company:

• A director’s resignation maybe considered if he gives the company written notice of the reasons for his resignation.
• On receipt of the director’s notice, the Board of Directors must present it to the shareholders in general meeting so that they are informed.
• The fact of the director’s resignation must be included in the directors’ report presented to the shareholders at the General Meeting.
• The Company must also file Form DIR – 12 with the Registrar within 30 days of the date of resignation.
• The resignation will take effect on the latest of the following dates:
  • Date specified in the notice
  • The date on which notice is received by the company
• The director will submit Form DIR – 11 to the Registrar of Companies (ROC) within 30 days of his resignation date, along with the prescribed fees, including a copy of his notice of resignation and the detailed reasons for the same.

Insights on Form DIR – 11

This form must be completed in order to notify the Registrar of the director’s resignation. The following information must be entered:

• Company information.
• The resigning director’s DIN.
• The date on which the resignation was filed with the company.
• The reasons for resignation.

Documents that are needed to be attached:

• Resignation notice was submitted to the company.
• Proof of dispatch.
• If any, acknowledgement from the company.
• Any additional optional attachments.

When a director is removed from a company:

Removal occurs only before the director’s term expires. This can be accomplished by passing an ordinary resolution at the shareholders’ meeting, but only after providing the director with a reasonable opportunity to be heard.

1. Notice of a resolution

• A notice of the resolution to remove the director will be sent to all relevant parties at least seven days before the meeting.
• If the notice cannot be delivered due to unavoidable circumstances, the following should be done:
  • It can be published in newspapers (One in English and the other in the local language).
  • The notice must be made publicly available on the company’s website.
• When this notice is received, the company is required to send a copy to the appropriate director.
• He will have the right to be heard at the General Meeting where the resolution will be voted on.

2. Written representation by a director of a company  

• The director may file a written protest against his dismissal.
• He can also ask for the representation to be distributed to all members.
• It will be necessary to notify the members of this.
• If circulation is not possible, he may request that it be read aloud at the meeting.

3. Filing with Registrar of Company (ROC)

• Form DIR – 12 must be filed with the Registrar within 30 days of the director’s resignation, along with the prescribed fees and mandatory attachments.

Conclusion

Whatever the reason for a change in a company’s directors, whether Appointment or Resignation, there is always an obligation to submit an extracted copy of the resolution passed in a meeting of the Board of Directors or a General meeting of shareholders, along with the required form, to the concerned ROC officials within thirty days of the date of the board meeting or the effect of the resolution in the case of a shareholder meeting is passed. In addition, the Statutory Registers of the Company must be updated in order to effectively implement the change of director in a company according to the provisions of the Companies Act, 2013.