How to Change Directors in a Company: A Detailed Stepwise Approach

Introduction to Changing Directors in a Company - 

Changing directors in a company is a crucial process governed by the Companies Act, 2013, which provides a legal framework for the appointment, resignation, and removal of directors. Directors play a vital role in the management and governance of a company, making their selection and replacement essential for ensuring effective leadership and compliance with regulatory requirements. The Companies Act, 2013 outlines specific provisions to ensure transparency, accountability, and efficiency in the appointment and removal of directors.

Understanding the Legal Framework: Companies Act, 2013 –

The Companies Act, 2013 serves as the primary legislation governing corporate governance, management, and the operation of companies in India. It lays down the rules and regulations concerning the appointment, resignation, and removal of directors, ensuring transparency, accountability, and compliance in a company’s functioning.

Key provisions of the Companies Act, 2013, related to changing directors in a company –

1. Section 149 – Appointment of Director
2. Section 152 – Appointment of Director by Shareholders
3. Section 168 – Resignation of Director
4. Section 169 – Removal of Director
5. Section 154 – Approval by Shareholders

Appointment of Director -

1. The individual must be at least 18 years old.
2. A person must have a valid Director Identification Number (DIN), which is issued by the Ministry of Corporate Affairs (MCA).
3. The person must not have been convicted of any offense involving fraud or dishonesty or any other disqualifying criteria under the Companies Act, 2013.
4. In the case of public companies, at least one director must be a resident of India.

Resignation of Director –

1. The director must provide a written notice of resignation to the company.
2. The resignation should be made in compliance with Section 168 of the Companies Act, which requires filing Form DIR-11 with the MCA.
3. The director must not have any pending legal proceedings, liabilities, or obligations toward the company.
4. If the director has concerns related to the company's governance or policies, they are required to disclose these reasons in their resignation letter.
5. The resignation must also comply with the provisions outlined in the company’s Articles of Association.

Disqualifications for Director –

1. Conviction for any offense related to fraud, breach of trust, or criminal activities.
2. Disqualification under Section 164(2) due to failure to file financial statements or annual returns for three consecutive financial years.
3. Bankruptcy or insolvency.
4. Violation of any provisions under the Companies Act related to companies’ filings or compliance.

Documents Required for Changing Director in a Company –

Documents for Appointment of a Director –

1. Consent to Act as Director (Form DIR-2)
2. Director Identification Number (DIN)
3. Declaration of Non-Disqualification (Section 164)
4. Identity Proof
5. Address Proof
6. Notice of Appointment (Board Resolution)
7. MCA Filing Form DIR-12

Documents for Resignation of a Director –

1. Resignation Letter
2. Board Resolution for Acceptance of Resignation
3. Form DIR-11 (Optional for Director)
4. Form DIR-12 (Mandatory for Company)
5. Acknowledgment of Resignation

Documents for Removal of a Director –

1. Notice of General Meeting
2. Special Resolution Passed in General Meeting
3. Opportunity to Be Heard
4. MCA Filing Form DIR-12

 Additional Supporting Documents –

1. Updated Register of Directors and Key Managerial Personnel (KMP)
2. Minutes of the Board Meeting
3. Articles of Association (AOA)

Process for Changing Director in a Company –

Appointment of a New Director –

1. Obtain Consent from the Proposed Director
2. Applying for Director Identification Number (DIN) & Digital Signature Certificate (DSC)
3. Hold a Board Meeting
4. Issuing a Letter of Appointment to the Director
5. File Form DIR-12 with the Registrar of Companies (RoC)
6. Update Company Registers
7. Disclosure to MCA and Stakeholders

Resignation of a Director –

1. Written Resignation by the Director
2. Board Resolution for Acceptance of Resignation
3. Filing of Form DIR-11 (Optional for Director)
4. Filing of Form DIR-12 (Mandatory for Company)
5. Update Company Records

Removal of a Director –

1. Issue Notice of General Meeting
2. Pass a Resolution for Removal
3. Filing Form DIR-12
4. Update Statutory Registers

Conclusion - 

Changing directors in a company is a crucial process that requires careful adherence to the provisions of the CompaniesAct, 2013. Whether it involves the appointment, resignation, or removal of a director, each step must be executed meticulously to ensure compliance.

To obtain our knowledgeable and effective legal advice and services for changing a company's board of directors, connect with Global Jurix through official website.