A director is generally not required to give a notice period unless specified in the company’s Articles of Association or in the director’s service agreement.
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About Appointment Of Director
Directors are generally appointed as per the applicable provisions of the Companies Act 2013, by the shareholders of the company to ensure that the day to day operations of the company are executed in an efficient manner. They have a fiduciary duty to the company and its shareholders, which means to say that they are responsible for conducting the affairs of the company in a way that ensures success and profitability and thus enhancing the image of the company and its reputation.
The change in the directorship of a company is possible at any time as and when needed. The change can be either voluntarily or through demand. The demand arises in case there is a requirement of an expert in the board or due to resignation or death of an existing director.
What is the Role of a Company Director?
Generally, a Company acts through 2 bodies of people one is its shareholders & other is its BoD (Board of Directors). The BoD are in charge of the management of the Company; they make the strategic & operational decisions of the Company & are responsible for ensuring that the Company meets its legal obligations. The primary role of a Director is to participate in Board Meetings to enable the board to reach such decisions & ensure that the Company’s obligations are fulfilled. The Directors of a Company are effectively the Company’s Agents, appointed by the Shareholders to manage the Company’s daily affairs. The basic rule is that Directors should act combinedly as a Board but generally the board may also delegate certain of its powers to individual Directors/to a committee of the Board.
You may also be an employee or a Shareholder of the Company (or both) & if so, may have additional rights & duties going beyond those purely associated with your Office as a Director. It’s vital that you draw a difference between these separate roles. This guide doesn’t deal with the separate rights & duties which you may also have as an employee or a Shareholder.
Eligibility Criteria to become a Director
Following is the criteria to become a Director of a Company:
- An Individual’s age should be above 21 years & below 70 years;
- The individual shouldn’t be an undischarged insolvent;
- There shouldn’t be any order in force passed by a Court or Tribunal disqualifying the person for the appointment of a Director;
- An individual shouldn’t have been convicted by a court of an offence & sentenced to imprisonment for more than 6 months & a period of 5 years should have elapsed from the expiry of the sentence;
- An individual shouldn’t have applied to be adjudicated as an insolvent;
- There shouldn’t be any order in force passed by a Court or Tribunal disqualifying the individual for Director’s appointment;
- The person must have DIN & DSC;
- An individual shouldn’t have been convicted of the offence dealing with related party transactions under Section 188 at any time during the preceding 5 years;
- The person or an individual shouldn’t be appointed as a Director in more than 19 companies or 9 companies in the case of public companies since the maximum number of companies in which a person or an individual can act as a Director is 20 companies or 10 companies in the case of public companies;
- An individual can’t be appointed as a Director if he or she is a Director in the following companies:
- A Company that has failed to repay the deposits, interest on deposits, failed to redeem any debentures on the due date, pay interest on debentures, or pay the dividend declared for more than 1 year;
- A Company that hasn’t filed financial statements/annual returns for a continuous period of 3 Financial Years.
Resignation of a Director (Section 168 of the Companies Act 2013)
- The resignation notice of a director may be given to the company in writing, stating the reasons for the resignation.
- The Board of Directors, upon receiving the resignation notice, must present it in the General Meeting to inform the shareholders.
- The resignation of the director must also be included in the director’s report, which is presented to the shareholders in the General Meeting.
- The company must file Form DIR-12 with the Registrar within 30 days of the director’s resignation.
- The effective date of resignation will be the latest of:
- The date on which the notice is received by the company.
- The date specified in the resignation notice.
- The director must submit Form DIR-11 to the Registrar of Companies (RoC) within 30 days, along with the prescribed fees, a copy of the resignation notice, and the reasons for resignation.
Documents Required for Change in Director of a Company
Details of the Directors :
- PAN card, Aadhar card, Photo
- Mobile Number, Email ID
- Educational qualification
- Bank statement with Name and Address – Not Older Than 2 Months
- How many years stayed in the given address
- Driving Licence / Voters ID / Passport (Identity Proof)
- Share contribution
- Digital signature *
Change in Directors and Related Procedure
The provisions of the Companies Act, 2013 read along with the Companies (Appointment and Qualification of Directors) Rules, 2014 sets down the procedure for the change in Directors.
Addition of a Director
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Notice to be sent to the directors regarding the agenda of the meeting at least 7 days prior to their respective registered addresses.
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Pass a Board Resolution to call for a General Meeting where the appointment of the director can be made.
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Notice to be given to the shareholders regarding the particulars of the meeting, including the agenda, date, time and place of the meeting.
Meeting has taken place, the person so appointed to circulate the notice regarding the General Meeting (“GM”), may issue to the notice to all of the following:
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Directors
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Shareholders
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Auditors
The notice of the GM has to be given not less than 21 days prior to the date on which the GM is to be held. However, a shorter notice period can be given if and only if the consent is given by not less than 95% of the members who are entitled to vote at the meeting. The consent has to be obtained either through:
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Writing
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Electronic mode
At the GM, the resolution will be passed subject to the approval of the shareholders.
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Form DIR – 12 has to be submitted to the Registrar within 30 days from the appointment being made.
Frequently Asked Questions
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Is there a notice period for resignation?
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What happens if a director resigns without following the formalities?
If the proper procedure is not followed, the resignation may not be recognized, and the director may remain legally bound by their duties until formally removed.
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Can a director be appointed without their prior knowledge?
No, a person cannot be appointed as a director without their consent. The individual must formally agree to the appointment in writing.
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What qualifications are required for a director?
Must be at least 18 years old, not disqualified and a natural person.
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Can a director resign?
Yes, a director can resign at any time by submitting a resignation letter.
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Who is eligible for appointment of director?
Any person above 21 years can become a director of a company. The AOA of a company should contain provisions for adding a director. The Companies Act, 2013 prescribes the procedure that a company must follow to add a new director.
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What is dir 2 form?
Form DIR-2 is a document used by a person to give their consent to act as a director of a company. It includes a declaration that the individual is not disqualified from being a director under the Companies Act, 2013.