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.
As per Section 149(1)(a), the minimum number of directors required for each type of company is as follows:
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.
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 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.
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)
Thereby, you will have the new company director’s name on the MCA website.
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.
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.
Can a Director resign himself or herself from the company?
Yes, any director can voluntarily resign from the company if they wish to do so. In such a case, they must first serve a notice of resignation to the Company stating their reason for resigning and also mentioning the date of resignation.
Furthermore, they must also file a form to intimate the MCA regarding their impending resignation from the company. This e-form must be filed within 30 days of the resignation. Furthermore, if the vacancy results in a shortage of the minimum required Directors, the Company must appoint a new Director within 6 months to continue functioning.
Is there any eligibility criteria for adding a new Director?
Yes, there is and it is as follows
Should I apply for another DIN, if I already have one?
No, a DIN or Director Identification Number is permanently allotted and can hence, be used for a lifetime. Therefore, once it is allotted, the same number may be used for multiple appointments and resignations.
Can a Company appoint another Corporate Body as its working Director?
As per the Companies Act, 2013, only individuals can serve as Directors of Public and Private Limited companies. Therefore, a corporate body cannot be appointed as a Director of any company in India. Therefore, if any LLP or Private Limited Company wants to serve as a Director, they must send a representative and then appoint that person as a Director.
Can a Company add a Foreigner or NRI as a Director?
Yes, an NRI or Foreign National may be added as a Director in a Private Limited Company. In order to do so, they must have a valid Passport and a DIN. In case they do not have a DIN, they must apply for the same via the Company they wish to become a Director of. However, as per the Companies Act, 2013, at least one Director on the Board must be an Indian Resident and the rest may be foreigners or NRIs.
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