Adding/Removing a Director

A Director is one of the most important constituents of a company and is appointed by the shareholders. The numbers of directors that a company can have is regulated by the type under which the company has been incorporated. For example, a private limited company needs at least two directors as does a limited liability partnership. Just like their appointment follows a stipulated procedure, removing a director from a company must also follow a due process.

When a company decides to remove a director, a board meeting has to be called with seven days notice given to all the directors clearly informing them of the agenda. When the meeting is conducted, a resolution to hold the extraordinary general meeting has to be passed. The resolution to remove the director depends on shareholders’ approval. A notice of 21 days should be given before holding the general meeting where the decision of removal is put to vote. The director whose fate is being decided must be given an opportunity to state his/her views before the voting. The resolution stands passed if majority vote in favour. The director is then asked to submit the resignation letter along with the Form DIR-11. The company has to fill Form DIR-12. The resignation letter, Form DIR-11, Form DIR-12 and the board resolution must be then submitted to the Registrar of Companies formalising the removal who will then instruct the deletion of the director’s name from the Ministry of Corporate Affairs website.

A director may also be removed if he/she misses three continuous board meetings even after being duly informed about them. Then Form DIR-12 is filled in his name and forwarded to the RoC for removal from the ministry database.

Removal is most of the time accompanied by a change of company director. The new person being considered by the company for the post of director must have a Digital Signature Certificate and Director Identification Number. The same process of calling a board meeting takes place with the difference being that when adding a director to a company, consent of the individual in question must be taken in the prescribed format. If the resolution is passed then an appointment letter is handed to the person. The company file Form DIR-12 with the consent letter and other required documents with the RoC who updates the information the department website.

Business Venture India provides helps organization in both the scenarios, besides assisting them in finding replacements by conducting a customized company director search in India for them.