Overview of Change in Directors

A company is considered an artificial entity. Unlike a natural person who has a mind and hands to make decisions and take actions, a company lacks these abilities. Therefore, it must function through living individuals. Directors are responsible for overseeing the company's operations and making strategic decisions.

A director plays a crucial role in managing an organization by utilizing their skills and expertise to drive its success. Appointed by the company, a director is responsible for overseeing daily operations in compliance with the Companies Act, 2013. Directors are accountable to the company and its shareholders, ensuring growth, profitability, and goodwill. Any changes in the company's board of directors must be reported to the concerned Registrar of Companies (ROC) within 30 days of passing the resolution for the change. This is done by filing e-Form DIR-12 with the ROC.

Director Meaning

As per Section 2(13) of the Companies Act, 1956, a director is any person exercising the function of a director, irrespective of the title they hold. Their appointment, duties, retirement, and remuneration are governed by the Articles of Association.

Section 160 of the Companies Act, 2013: Change in Directors

Section 160, along with Rule 13 of the Companies (Appointment and Qualification of Directors) Rules, 2014, outlines the process for appointing a director other than a retiring director.

Procedure for Appointment of a New Director

1.       Apply for a Director Identification Number (DIN) by filing form DIR-3. Sections 66A and 266B of the Companies Act, 2013, govern the DIN process.

2.       Conduct a Board Meeting and pass the necessary resolution.

3.       Issue a notice for a General Meeting at least 21 days in advance to all stakeholders.

4.       Approve the director's appointment during the General Meeting by passing a resolution.

5.       Issue an appointment letter to the director.

6.       File e-Form DIR-12 with ROC within 30 days of appointment, along with a copy of the Certified True Copy (CTC), Consent, and the director's appointment letter.

7.       File e-Form MGT-14 for disclosure of the director’s interest in MBP-1.

Qualifications for Appointment

1.       The director must be of sound mind.

2.       Only an individual can be appointed as a director under Section 149.

3.       The director must be solvent.

4.       The person must not have been convicted of any offense by a court.

Section 168 of the Companies Act, 2013: Resignation of Directors

Section 168 provides a detailed explanation of the procedure for a director’s resignation, which was not covered in the original Act of 1956.

Procedure for Resignation of a Director

1.       The director must submit a written notice of resignation, including reasons, to the company.

2.       The resignation takes effect from the date the notice is received by the company.

3.       The resigning director must file DIR-11 with the ROC to inform about the resignation.

4.       The company, upon receiving the resignation notice, must approve it through a resolution.

5.       The company must file DIR-12 with ROC within 30 days of the resignation's effective date.

Section 169 of the Companies Act, 2013: Removal of Directors

Section 169 specifies the process for removing a director. It grants shareholders the right to remove a director by passing a resolution in a General Meeting.

Procedure for Removal of a Director

1.       Shareholders may remove a director by passing an ordinary resolution in a General Meeting.

2.       A special notice of the intention to remove the director must be given by the shareholders.

3.       Upon receiving the notice, the company must inform all members at least seven days before the meeting date.

4.       The concerned director must be notified and given an opportunity to present their case.

5.       The resolution must be filed with the ROC within 30 days using Form MGT-14.

Fastzeal Support

For a seamless and efficient process of changing directors, Fastzeal provides expert assistance in handling all necessary forms and documentation. With extensive experience in compliance and corporate restructuring, we assist businesses with director changes—whether minor modifications or complex restructuring. Our team is dedicated to delivering top-notch service, ensuring a hassle-free experience in modifying your company's organizational structure.