The board of directors can remove an existing director and appoint a new one provided it is provisioned in the Article of Association.Our experts help you complete the secretarial formalities and file the mandatory forms with MCA.
As per section 260 and section 284 of the Companies Act, 1956, the Articles of Association of a company are the source of authority from where the Board of Directors draws the right to add new directors to the Board or remove existing ones. The Articles of Incorporation must provide for the addition of Directors. The person appointed must be eligible as per the relevant clauses in the Articles of Association and must give his consent to be a director in written form which the company must register with itself.
Get new talent on board
The business world is extremely competitive and that is why it is so important for companies to stay on top of their game at all times. As businesses grow and evolve, they undergo several upheavals with regard to strategies, policies, and objectives. Therefore, sometimes companies need to get new talent on board to help formulate new strategies and business plans. Furthermore, as new alliances form between corporations, new talent is required to bridge gaps and ensure the smooth functioning of the organisation. As companies expand and venture into new areas, team leaders and experts can move from their managerial position into the role of a director to help the company stay on track.
No dilution of ownership
Directors are primarily responsible for the day-to-day operations of a company. Adding or appointing an additional director helps the shareholders assign more operational responsibilities without losing any strategic control. As a Director does not subscribe or own any share capital, the ownership and the voting rights that come along with it, remain with the shareholders, preventing any dilution.
The inefficiency of existing directors
The existing directors may or may not be able to serve the company faithfully, in certain cases. In such circumstances, maybe even due to retirement, family problems, other personal reasons or physical ailments, the company adds new directors to make sure their productivity is unaffected. Hence, from time to time, companies need to process the termination and addition of new directors, so as to ensure their continued growth and success.
To meet the statutory limit
In certain cases, due to sudden death or plans of retirement from existing Directors, companies fall short of the minimum required directors as prescribed by the Companies Act. Therefore, such Private and Public companies need to appoint new directors within 6 months to continue functioning as a legally valid entity.
(PAN card: Mandatory for an Indian Applicant Passport: Mandatory for a foreign Applicant)
After the process
Thereby, you will have the new company director’s name on the MCA website.
3 Working Days
The newly-appointed director must apply for a Director Identification Number by filing E-Form DIN-1 with the Ministry of Corporate Affairs, Government of India.
4 Working Days
A resolution needs to be passed by the board, approving the appointment of a director. Once this is done, we will file Form DIR-12 with the Registrar of Companies.
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