Add & Remove Directors
Add & Remove Directors – Services by Deepak Prakash & Associates
A company’s board of directors plays a crucial role in the governance, management, and strategic direction of the business. At times, due to changes in the company’s structure, operational needs, or other reasons, it becomes necessary to add or remove directors. These changes need to be done in compliance with the Companies Act, 2013, and relevant corporate laws.
At Deepak Prakash & Associates, we provide expert services to add or remove directors from your company in accordance with the legal requirements. Whether you are looking to expand your leadership team or make necessary changes in your board structure, we assist you through the entire process, ensuring smooth transitions and compliance with all legal and regulatory obligations.
This detailed guide will help you understand the process of adding and removing directors from your company and how Deepak Prakash & Associates can assist you in navigating this process effectively.
Adding Directors to a Company
Adding a new director to your company involves a series of steps to ensure that the process is legally valid and meets all statutory requirements under the Companies Act, 2013. Here’s how the process works:
Eligibility Criteria for a Director
Before adding a new director, the company must ensure that the individual meets the following criteria:
- Legal Capacity: The individual must be a natural person (not a corporate entity).
- Age: The individual should be at least 21 years of age and below 70 years (unless specified otherwise).
- Director Identification Number (DIN): The individual must have a valid Director Identification Number (DIN). If they don’t have one, they must apply for it through the Ministry of Corporate Affairs (MCA).
- Consent to Act as Director: The individual must give their written consent to act as a director on the company’s letterhead.
Steps to Add a Director
Board Resolution:
- The process begins with a board resolution. The existing board of directors should approve the appointment of the new director in a board meeting. The resolution must specify the details of the individual to be appointed, including their qualifications, experience, and role in the company.
- The process begins with a board resolution. The existing board of directors should approve the appointment of the new director in a board meeting. The resolution must specify the details of the individual to be appointed, including their qualifications, experience, and role in the company.
Obtain Consent from the Individual:
- The individual being appointed must provide their written consent to act as a director in the prescribed format (Form DIR-2).
- The individual being appointed must provide their written consent to act as a director in the prescribed format (Form DIR-2).
Filing with the Registrar of Companies (ROC):
- After the board resolution is passed, the company must file Form DIR-12 with the Registrar of Companies (ROC). This form must be filed within 30 days from the date of the board resolution.
- The company must also attach the following documents:
- Board Resolution.
- Consent letter from the individual (Form DIR-2).
- Proof of identity and address of the individual being appointed.
Issuance of Certificate:
- Upon successful filing of the form and all necessary documents, the ROC will issue an updated Certificate of Incorporation, showing the new director’s name.
- Upon successful filing of the form and all necessary documents, the ROC will issue an updated Certificate of Incorporation, showing the new director’s name.
Updating the Register of Directors:
- The company must update its Register of Directors and ensure that the name of the new director is recorded.
Important Points to Note
- If the appointment of the director is subject to shareholder approval, it must be approved in a General Meeting (AGM or EGM).
- The newly appointed director must also provide necessary KYC details to the company.
Removing Directors from a Company
There may be several reasons why a company may need to remove a director, including resignation, retirement, completion of tenure, or due to disputes. Removing a director involves specific legal procedures, and it’s crucial to ensure that the process complies with the Companies Act, 2013 and the company’s Articles of Association.
Reasons for Removing a Director
- Resignation: A director may voluntarily resign from their position.
- Disqualification: The director may become disqualified under the provisions of the Companies Act, such as due to non-filing of returns, failure to comply with statutory requirements, or conviction in criminal offenses.
- Shareholder Resolution: The shareholders may vote to remove a director, subject to certain conditions.
- Incapacity or Death: If a director is incapacitated or passes away, they will automatically cease to be a director.
Steps to Remove a Director
Board Resolution:
- The process to remove a director typically starts with a board resolution if the removal is due to resignation or due to a disqualification under the law. The company must call a board meeting to discuss and approve the removal.
- The process to remove a director typically starts with a board resolution if the removal is due to resignation or due to a disqualification under the law. The company must call a board meeting to discuss and approve the removal.
Shareholder Approval (if applicable):
- If the Articles of Association (AoA) of the company require shareholder approval, the company will need to call a General Meeting (GM) or Extraordinary General Meeting (EGM).
- A special resolution must be passed by the shareholders to remove the director. The director being removed has the right to be heard at the meeting.
Filing with ROC:
- After the removal is approved by the board or shareholders, the company must file Form DIR-12 with the Registrar of Companies (ROC) within 30 days from the date of removal.
- The filing should include:
- Board Resolution or Special Resolution.
- Notice of Resignation (if applicable).
- Proof of Identity and Address of the removed director.
Issuance of Updated Certificate of Incorporation:
- After the ROC approves the removal, it will issue an updated Certificate of Incorporation reflecting the change in the directorial composition.
- After the ROC approves the removal, it will issue an updated Certificate of Incorporation reflecting the change in the directorial composition.
Update the Register of Directors:
- The company must update its Register of Directors to reflect the removal of the director.
Important Points to Note
- If the director is being removed due to misconduct or other serious reasons, the company must adhere to the natural justice principles, giving the director a chance to present their case before the removal decision.
- If the director is a promoter or key managerial person, additional provisions may apply, and the company must comply with the shareholder approval process.
Why Choose Deepak Prakash & Associates for Adding or Removing Directors?
At Deepak Prakash & Associates, we understand the complexities involved in adding or removing directors from a company. Whether you are expanding your leadership team or making strategic changes to your board, our team provides end-to-end services to ensure that the entire process is carried out smoothly and in compliance with the legal framework.
Here’s how we can assist you:
Expert Advice: We provide expert advice on the most suitable course of action for adding or removing directors based on your business needs and legal obligations.
Legal Compliance: We ensure that all processes, including the filing of necessary forms and obtaining necessary approvals, are done in full compliance with the Companies Act, 2013.
Document Preparation: Our team assists in drafting the necessary documents, including board resolutions, consent letters, and notices required for the process.
Timely Filing: We handle all the paperwork and filing with the Registrar of Companies (ROC) on your behalf, ensuring that all deadlines are met.
Comprehensive Support: We provide ongoing support in case of any legal or regulatory concerns, including shareholder resolutions and general meeting procedures.
