Add or Removal of Director or Change patner

Add/Removal of Director/ Change of partners:

Description: Directors are key persons who manages the company. They are management of company who looks after operations and administration. The Change in Director of Company happened due to resignation of director or appointment of director. Appointment or removal of directors is done through shareholder of company. Minimum two directors are required under Private Limited company and Three under Public Limited Company. Companies Act does not require any mandatory educational capabilities to appoint or remove director. Article recommends procedure for change Director of company. Only Individual can be appointed as director in company, Company must have one resident director. We can help in necessary legal filing to add or remove a director from company.

Basis pre requirement to add a Director is Digital Signature. Once Digital signature is done, legal filing can be done to MCA for issuing Director Identification Number for Proposed director. With DIN number Proposed director can be added in company with consent of shareholders. Before removal of director from company its important to note that company have minimum two directors.

Different Categories of Directors

• Executive Director
• Non-Executive Director
• Managing Director
• Independent Director
• Residential Director
• Small Shareholder Director
• Women Director
• Additional Director
• Alternate Director
• Nominee Director

Process for Removing a Director: A Company can remove its directors before the expiry of its term, these powers are vested with the shareholders. Here we will talk about the process of removing the Directors of a Company. In case of Non-compliance with any one of these processes can make the decision void, if appealed in a court.

• Basic Prerequisite: This process of removing the Director cannot be initiated without providing an opportunity to the Director who is to be removed. This is one of the basic requisites on the laws ordained which provides the defendant or the defaulter an opportunity of being heard.
• Issuing Notice: This process of removing Directors must be initiated by a notice. This notice should be processed by the shareholders that have a minimum voting power of 1% or someone who holds shares on which an aggregate sum of not more than Rs. 5,00,000 is paid upon the date of the notice. This is a special notice that should be signed by all the members. This special note should be delivered to the Company at least 14 days before the meeting is held at which resolution will be passed. The notice won’t be valid if isn’t issued before three months of the date of the meeting.
• Notice to Members: The Director must be sent a copy of the Notice, who will be heard on the resolution at the meeting, whether the director is a member or not a member of the Company. The notice should be served at least seven days which is a week before the date of the meeting which is held.

If the shareholders are not able to deliver the notice it can be published in any two newspapers, one in English and one in the vernacular newspaper. The notice must be mandatorily posted on the company’s website again this should be done seven days before the date of the meeting.

• Representation in writing: The concerned director can make a representation against this removal notice. The director can request the company to send the representation to all the members. Also, the members should be notified of the representation by a notice. In case the company is not able to all the members the director may request for reading of this representation.
• Appeal to the Tribunal: An application can be made to the tribunal if the organization or any aggrieved person decides against sending out the representation to the members or reading it out in the meeting, to request to nullify the process. The tribunal can also annul the process if it finds that the Director uses this right for unnecessary publicity for defaming purposes. This director is also given the right to issue an order demanding the director to cover the cost of the application borne by the company.

Process to add a Director to a Company:

The Directors of the company play a crucial role in the functioning. The conduct of the business and the day-to-day decisions are made by the Directors. The Directors happen to be the key people in which the shareholders of the company trust to invest their money. In this article, we are going to discuss how a company can legally change and have new directors on board in India.

The first step is to obtain the consent of the proposed directors: The consent of the proposed director is necessary, according to form DIR-2 this is a very crucial document and the company is required to obtain the Form DIR-2 before proposing him to the Director of the Company.

Digital Signature Certificates of the Proposed Directors: In case the proposed directors of the company do not have Digital signatures, they need to obtain a DSC.

Get the Director Identification Number (DIN): In case the Proposed Director does not have a DIN, then the company should apply for the DIN of the proposed person. This resolution is to be attached to the form DIR3. This DIN that is allocated once can be used for a lifetime. DIN can be obtained for any person who is above the age of 18. Also, the nationality of the proposed does not matter. Hence, the Indian Nationals, Non- Resident Indians, and Foreign Nationals can obtain the DIN and be appointed as Directors in a Private Limited Company in India.

The Company should obtain all the KYC Documents along with the necessary educational qualifications documents as per the conditions of the job. Also, there is no minimum education qualification to hold the post of Director in the Company in India.

Documents Required for Addition Or Removal Of Directors:

• Photograph: Passport size photo of the Director.
• PAN Card: Self-attested PAN card of the Director.
• Proof of Residency: Aadhar Card/ Voter ID/ Passport/ Driving License of the Director.
• Digital Signature Certificate: DSC of the ongoing Director and Director to be eliminated/removed.
• Identity proof as mentioned above – Passport/Election card/Driving License/Aadhar card.
• Consent letter from Director
• Mobile number as well as personal and official email ID of the Director.
• It is mandatory to certify all the documents if the director is a non-resident of India.
• Notice of resignation filed with the company.

Highlights in Changing Directors:

• Minimum Age: A Person at least of 18 years Old can be appointed as director in Company. In other words, minor is not allowed to become directors. Same applied to Foreign directors.
• Director Identification Number: Prerequisite requirement to add director is Director identification number. This DIN number is Unique is allotted by Ministry of Corporate Affairs.
• Board of Director: A Private Limited need to have minimum two and maximum fifteen directors. The proposed director can be other than shared holder.

Benefits Of Adding Or Removing A Director:

• New talent in Committee- Inputs of each department are required for the growth of business. A new director can bring in specialisation, innovation and efficient work ethics.
• No obligation of ownership- Directors are responsible for daily operations. The director does not require subscribing to share capital, so there is no obligation over ownership and voting rights of shareholders with the new director appointed.
• The inadequacy of existing directors- The Company needs to make sure that it is not suffering due to the inadequacy of the existing directors. There is a possibility that any existing director is not working efficiently after a certain period or due to their personal reason or old age. So it is important to either remove or add a new director, if any.
• To comply with statutory requirements- The minimum number of directors in a private limited company is 2. So in order to fulfil the statutory limit, the number of directors shall not reduce below the limit.