Add or Remove a Director (Company)

Get finest directors on board with change of directors.

Know about directors’ change in a company

Directors are the said to be brain of the company. They are the managerial personnel who control and administer the company’s operations. The rotation of directors takes place in one or the other way – either by appointment of new director or resignation of existing. Aim to carry out change of directors is always to ensure optimum combination of experts on board for interest of company.

Limited liability is the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a private limited company the liability of the shareholders in respect of the company’s liabilities is limited. In other words, the liability of the shareholders of a company is limited only to the value of shares taken up by them.

The authority to approve the resignation of the director lies with the members of BoD whereas the appointment must be made through consent of shareholders. Whether it is an appointment, removal or resignation, the change does not take effect until the intimation is made to Ministry of corporate affairs.

Why changing directors is required?

Hire new talent on board

• With the growth of business, strategies and alliances are developed, that requires inputs of each department are required for effective planning. Also, with an addition of the new product line or department, an expert to lead the team can be hired in a managerial position being director of the company. This benefits the company with specialization and focused efforts.

Assign operational responsibility without dilution ownership

•Directors are responsible for day-to-day operations. With the appointment of an additional director, the shareholders can assign the operational responsibilities to directors keeping strategic control in hand. Here, a director does not require subscribing to share capital, hence, the ownership and voting rights of shareholders does not dilute with a new person on Board.

Inability to work by existing directors

• The existing directors may be unable to serve the company after a certain period due to retirement or other personal reasons. Whether it is a resignation by the director or his death, the company needs to make sure that its work is unaffected. It needs to process for both discontinuations by director and appointment of a new director if any.

Number of directors fall under statutory limit

• The Companies Act has prescribed the minimum number of directors in any company, which is 2 and 3 for Private and Public company respectively. At any time during the company’s existence, the number of directors shall not reduce below from the limit. The company must appoint a new director(s) within 6 months if the number reduces below 2/3.

Documents required for Addition or Removal of director

• Photograph - Passport size photograph of the director to be appointed
• PAN Card - Self-attested PAN card of the director to be appointed
• Proof of Residence - Aadhar Card/ Voter ID/ Passport/ Driving License director to be appointed
• Digital Signature Certificate - DSC of the continuing director and director to be removed