Appointment & Resignation of Director |

Appointment & Resignation of Director

Any change in Directors of the Company shall be intimated to the ROC within prescribed timeline under the act. Get the best Directors on the Board of your Company with Estabizz.

Overview

An Overview of Appointment of Directors

Directors are the intellect of the Company. Any change in the Board either its Appointment, resignation or Removal of Directors shall be intimated to the Ministry of Corporate Affairs. Change in Board of Directors is not the continuous process. However, the intimation is made to “Ministry of Corporate Affairs”

The power to authorize the resignation of Director lies with the Board of Directors. However, An appointment of the Directors must be approved by the shareholders of the Company.

Eligibility for Appointment of the Director

Age Limitation for a Director A person who want to act as the Director shall be of the minimum age to be competent to enter into any contract.
Managing Director, Full-time Director, or Independent director of a the company of 21 years and shall not above the age of 70 years.

Nationality of Directors A foreign national can be a director. However, there must be a minimum of one Indian director in the company.

Director Identification Number (DIN)Requirement Obtaining DIN or having a valid DIN is must before appointment of any Director.

Limit Of Valid Directorship A Person can be a director of 20 separate companies at a time. However, Out of these 20 companies, only 10 can be public companies.

Disqualification of Director1. Unsound Mind A Person who is of unsound mind or is incompetent of making decisions on his own cannot be appointed as a director.
2. Bankrupt Person A person who has filed bankruptcy claims in the court of law are disqualified from acting directors.
3. Criminal Background If a Person has criminal background in the past and was sentenced to confinement for more than seven years or more, cannot be a director.
4. Pending Overdue Returns If the individual has not met previous returns in any of the preceding years, he shall be barred from keeping the directorial position.

Classes of Director Appointed in the Company

Managing Director - they are granted with the full power and charge for the operation of the Company.

Executive Director - they run the day to day to working of the Company, which are more responsible and Effective for the Company.

Non- Executive Director - They are not into day to dayOperations of the Company.

Nominee Director - these are not the primary directors but are chosen by the PE/VC investors or banks who have provided the loans or shareholders in case of a certified company to represent their interests.

Independent Director - They are appointed in the Company to oversee and ensure sound governance.

Types of Directors

Different Directors have different roles in the Company as specified above, Hence appointment of Directors also depends on the type of business.

A public Company shall have minimum 3 Directors

Private Company shall have minimum 2 Directors

One Person Company shall have minimum 1 Director

Maximum number of Directors in public limited company shall be 15. However, after obtaining specific approval under the act a public company can appoint more then 15 directors.

Maximum number of directorships, including any alternatedirectorship a person can hold is 20

number of directorships in public companies/ private companies thatare either holding or subsidiary company of a public company shallbe limited to 10.

APPOINTMENT OF DIRECTORS under Section 152

First Directors

The first directors of most of the companies are named in theirarticles. If they are not so named in the articles of a company, thensubscribers to the memorandum who are individuals shall be deemedto be the first directors of the company until the directors are dulyappointed.

In the case of a One Person Company, an individual being amember shall be deemed to be its first director until the director(s) areduly appointed by the member in accordance with the provisions ofSection 152.

General provisions relating to appointment of directors

Director shall be appointed in General Meeting

Director must have valid DIN

Director must not be disqualified under the act

Director shall give consent to act as the Director of the Company

A resolution, whether special or ordinary, is required for hisappointment or re-appointment at the general meeting

Details of Appointment shall be intimated to the ROC in Form DIR-12 within 30 days of appointment of the Director.

Appointment of Additional Director under Section 161 (1)

The board of directors can appoint additional directors, as per the power conferred on them by the articles of association. Suchadditional directors hold office only upto the date of next annualgeneral meeting or the last date on which the annual general meetingshould have been held, whichever is earlier. A person who fails to getappointed as a director in a general meeting cannot be appointed asAdditional Director.

Resignation of director under sectionSection 168

A director may resign from his office by giving notice in writing.

The Board shall, on receipt of such notice within 30 days intimate theRegistrar in Form DIR-12 and also place the fact of such resignationin the Directors’ Report of subsequent general meeting of the companyand post the information on its website.

The director shall also forwarda copy of resignationalongwith detailed reasons for the resignation tothe Registrar in Form DIR-11 within 30 days from the date ofresignation.

The notice shall become effective from the date on whichthe notice is received by the company or the date, if any, specified bythe director in the notice, whichever is later.Provided that the directorwho has resigned shall be liable even after his resignation for theoffences which occurred during his tenure.

If all the directors of a company resign from their office or vacatetheir office, the promoter or in his absence the Central Governmentshall appoint the required number of directors to hold office till thedirectors are appointed by the company in General Meeting.

Documents required for Appointment and resignation of Director

Passport size Photograph

Self-attested Copy of PAN Card

Proof of Residency- Utility Bill / Bank Statement

Proof of Identity - Passport/Election card/Driving License/Aadhar card

Mobile Number and Email ID

DSC

Notice of resignation filed with the company

Proof of dispatch

Acknowledgment of form, if received.

FAQs

Will the director be held liable even after resigning?

Yes the director would only be held liable for the acts carried out when the individual was appointed as a director. The individual would not be liable for any other acts carried out by another director.

What is the meaning of independent director and non-Executive director?

Independent directors are individuals that are recruited in a public company. The functions that are performed by an independent director have some form of independence in decision making. Non-executive directors do not take part in carrying out the functions of the company.

Can I remove a director from the company without notice?

No prior notice must be provided before the removal of the director.

Can a Director resign own self from the Company?

Yes

Can the resignation of “Director be rejected?”

As per section 168 of Companies act 2013, the administration does not have any right to reject the resignation presented by a director.

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Overview Classes of Director Appointed in the Company Types of Directors
APPOINTMENT OF DIRECTORS under Section 152
Documents required for Appointment and resignation of Director
FAQs
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