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Also read about The Unique Identity Of A Company Director As Per The Company Law

Removing The Company Director 

Every private company has to have a minimum of two directors, and any public company has to have at least three directors at any given time. Let us look at three possible cases during the removal of a director:

1) When The Director Himself/Herself Submits his/her Resignation

The concerned director submits his resignation to the Board. In this case, the following steps will be taken to remove his name from the register of directors:

The company will hold a Board Meeting by giving seven days of clear notice (Clear notice means 21 days notice excluding the day on which the notice was sent and received.

When the Board meets, they will discuss amongst themselves and decide whether to accept the resignation or not.

Once the Board accepts the resignation of the director they will pass a Board resolution accepting the resignation in the following format:

“RESOLVED THAT the resignation of Mr. XYZ be and is hereby accepted with immediate effect
“FURTHER RESOLVED THAT the Board places on record its appreciation for the assistance and guidance provided by MR. XYZ during his tenure as Director of the Company”

“RESOLVED FURTHER THAT directors of the company be and are hereby jointly authorized to do all the acts, deeds and things which are necessary to the resignation of the aforesaid person from the directorship of the Company
After the passing of the resolution, form DIR – 11 has to be filed by the outgoing director along with the Board Resolution, Proof of delivery of the resignation letter and a copy of the resignation letter.

While the filing of DIR – 11 is the responsibility of the director, form DIR – 12 is the responsibility of the company which has to be filed with the Registrar of Companies along with the Resignation letter and the Board Resolution.
After filing all the forms, the name of the director will be removed from the master data of the Company on the Ministry of Corporate Affairs website.

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2) When The Board Removes The Director Suo-moto

A Company has the authority to remove a Director by passing an Ordinary Resolution, given the Director was not appointed by the Central Government or the Tribunal.

A Board Meeting will be called by giving seven days’ notice to all the directors. A special notice will go to the directors informing them about the removal of the director.

On the day of the Board Meeting, a resolution for the holding of an extraordinary general meeting will be passed along with the resolution for the removal of the director subject to the approval of the shareholders.

A general meeting will be held by giving 21 days clear notice. In the meeting, the members will be asked to vote on the matter. If the majority is in favour of the decision, the resolution will be passed.

Before the passing of the resolution, an opportunity of being heard will be given to the director.

After the passing of the resolution, the same procedure will be followed, and the forms DIR – 11 and DIR – 12 will be filed along with the same attachments of the Board Resolution, Ordinary Resolution.
After the filing of the forms, the name of the director will be struck off from the Ministry of Corporate Affairs website.

3) When the Director Does not Attend 3 Board Meetings in a Row

As per section 167 of the Companies Act, 2013 if a Director does not attend a Board Meeting for 12 months, starting from the day on which he was absent at the first board meeting even after giving due notice for all the meetings, it will be deemed that he has vacated the office and a Form DIR – 12 will b filed on his name and his name will b removed from the Ministry of Corporate Affairs.

Conclusion

The removal of a director from the company is a big corporate development and thus there are special laws to tackle the same.  

You can also read About Increasing The Authorised Capital Of The Company. 

Also read The Unique Identity Of A Company Director As Per The Company Law.

The Decision To Change A Director/Appoint A New One In A Pvt Ltd Company 

In case, a company has to choose its new director and change an existing one, it is a big decision and involves various legal and other formalities and rituals.  As an existing director leaves and a new one comes up, it translates into a lot many changes. So, the company law has laid down various legalities and procedures while a company effects such a change. 

In Private Limited Company Directors plays main role in its functioning, Directors takes day to day decisions for business operations, Directors are key person in whom Shareholders of company trusts for their money invested, here in this article we will discuss about how a company can have new Director on its Board legally in India

You may also read The Removal Of A Company Director - Many Changes Are Painful. 

The Proposed Director Should Give His/Her Consent 

The proposed director should give his/her consent to act as Director in the Company as per Form DIR-2 , this is very important document and company must obtain form DIR-2 form before proposing him/her as the Director of the Company. 

Proposed Director Should Give His/Her Digital Signature

If proposed Director does not have Digital Signature , he must obtain Digital Signature from Certifying Authority in India.

Procure The Director Identification Number (DIN)
If the proposed Director does not have DIN , he should let the company know that he does not have ,and than the Company in which he is about to be appointed as Director is required to pass Board Resolution for proposing him to be Appointed as Director of the Company , the company should apply for DIN no of the proposed person. The Resolution is required to be attached with Form DIR 3.  ( This is new requirement for obtaining DIN , as new person cannot just apply for DIN if he is not to be appointed as Director in any Company. DIN is only allotted once for lifetime of Director.   

The Company should obtain all KYC documents along with necessary educational Qualification documents required as per terms of job, it is important to note that there is no minimum education qualification required to hold position of Director in the Company in India

A General Meeting Notice Should Be Issued 
The Director in the Company are appointed in the General Meeting , the Company should issue notice to all the Shareholders of the Company for holding Extra Ordinary General Meeting of the Company, Please note that Notice of General Meeting should be issued in accordance with provisions of Companies Act, 2013 and rules made there under and Secretarial Standards issued by Institute of Company Secretaries of India (ICSI).

An Extra Ordinary General Meeting of the Company Should Be Organised
Once the Notice of EGM is issued to the shareholders , now on the meeting date and time , hold the meeting and Pass the Necessary Resolution for Appointment of Director as Company.

Letter of Appointment Should Be Issued 
Now issue letter of appointment to the Director of the Company mentioning terms and conditions of appointment and salary to be payable to the Director.

File form DIR-12 to ROC
Once all the above steps are completed the Company should file Form DIR-12 to ROC within 30 days form the date of appointment of Director , It is always advisable to File the Form DIR-12 within next day of appointment, so as to avoid late filing and Additional Fee.

Make Required Entries In Register of Directors
Company should make necessary entries in the Register of Director and Key Managerial Personals. 

File Necessary Amendment Application to GST, Tax Authorities  Other regulators
The Company is required to make necessary application for Changes in Directors details in GSTN and Other Certificates, wherever applicable. 

Also read Know the various facts about Share Purchase Agreement. 

Conclusion

Changing a company director should be a smooth and natural process. It should not create disturbances, disruptions and ripples of disharmony or at least these things should be minimized. 

You may also read The Removal Of A Company Director - Many Changes Are Painful.

DIN – What Does It Stand For?

DIN is the unique number provided to the director of a company by the Central Government. We can also say it is a specific number provided to an individual, who directs one or more companies. DIN is specific to a person, which means even if he or she is a director in two or more companies, he or she has to obtain only one DIN. And if he or she leaves a company and joins some other company, the same DIN would work in the other company as well.

Well, DIN is made up of an 8-digit number that is valid all through, which means DIN exists until the person continues to be director of the company. Through DIN, details of the directors are maintained in a database.

The Usage of DIN

If a return, an application or any information related to a company is submitted under any law, the director signing such return, application or information will mention his DIN underneath his/her signature.

DIN Application Procedure

Whenever the application fee is paid and the application is submitted, the system will generate an application number. Central Government will undertake the application and decide the approval or rejection.

When the DIN application is approved, the central government will communicate the DIN to the applicant within one month.

In case, the DIN application is rejected, it will e-mail the the reason for rejection to the applicant and will also put the reason on the website. The applicant will have 15 days to rectify the reason. If he rectifies such reasons and is able to satisfy the central government, he will be allotted DIN otherwise central government will label the application INVALID.

The Categories For DIN: 

a)     SPICe Form: Application for allotment of DINs to the proposed first Directors in respect of New companies shall be made in SPICe form only.

b)    DIR-3 Form: Any person intending to become a director in an already existing company shall have to make an application in eForm DIR-3 for allotment of DIN.

 c) DIR-6 Form: Any changes in the particulars of the directors shall be filed in form DIR-6.

To apply for DIN, the above forms are to be filed electronically. It has to be digitally signed and then uploaded on the MCA21 portal .

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The Documents Required For DIN:

a) For SPICe Form

 Attach proof of identity and address proof. DIN would be allocated to an applicant only after approval of the form.

b) For Form DIR 3 

i)  Attachments: Photograph, Identity proof, Residence proof, Verification (Name, father’s name, present address, date of birth, text of declaration and physical signature of the applicant). In the case of foreign nationals, they are required to submit their passport as identity proof.

ii). Documents to be attested by a CA or CS or CMA:

Photograph, identity proof and residence proof must be attested by a Chartered Accountant or a Company Secretary or a Cost Accountant, in whole-time practice.

iii) In the case of foreign nationals, their documents can be attested by the Consulate of the Indian Embassy and Foreign Public Notary.

iv) After uploading DIR-3 and the supporting documents, the applicant will pay the fee in the next window screen. It has to be paid through net banking, credit card or NEFT. Manual(offline) payment is not allowed.

 c) For Form DIR-6
For changing any details mentioned in the DIR-3 form/ SPICe with respect to Directors, then Form DIR-6 has to be submitted online. With the form, the attested supporting document is also required to be submitted

 Generation of DIN:
 

Once the application fee is paid and the application is submitted, the system will generate an application number. Central Government will process the application and decide the approval/ rejection.

If the DIN application is approved, the central government will communicate the DIN to the applicant within 1 month.

If the DIN application is rejected, it will e-mail the reason for rejection to the applicant and will also put the reason on the website. The applicant will get 15 days to rectify the reason. If he rectifies such reasons and is able to satisfy the central government, he will be allotted DIN otherwise central government will label the application INVALID.

Intimating DIN to company:

Within one month of receiving a DIN from the central government, the director has to intimate about his DIN to all companies where he is a director.  

The company will intimate RoC about DIN within 15 days from the date when the director intimates his DIN to the company.

Failure of the director to intimate DIN to the company or failure of the company to intimate RoC about DIN will result in penalties.

Reasons for Surrendering or cancelling the DIN
The Central Government may cancel the DIN due to the following reasons:

If a duplicate DIN has been issued to the director. 
DIN was obtained by wrong means
On the death of the concerned person
The person has been declared of unsound mind by the court
The person has been adjudicated as insolvent
The director can also surrender the DIN in Form DIR-5. With the form, he has to submit a declaration that he has never been appointed as a director in the company and the said DIN has never been used for filing any document with any authority. Upon verifying the e-records, the central government will deactivate the DIN.

You can also read About Increasing The Authorised Capital Of The Company.