Change in Director of a Company – An Overview
Generally, a Company is a legal entity established by a group of individuals to engage in & operate a business entity (commercial or industrial) A Company may be organized in various ways for tax & financial liability purposes depending on the corporate law of its jurisdiction. A Company’s management structure includes a Directors’ position who are key managerial positions in any company. Directors take overall charge of management & operations in a Company. Usually, Directors of a Company are appointed as per the Companies Act, 2013 by the Company’s Shareholders to make sure that the day to day operations of the company are executed in an effective way. Directors of a Company have a fiduciary duty to the Company & its shareholders which means that all the Directors of a Company are responsible for conducting the Company’s Affairs in a way that ensures profitability & boosting the Company’s image & its reputation. Scroll down to check more about change in Director of a Company.
Change in Director – Meaning
The Change in Director of a Company is possible at any time when required. The change of Directors 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 death/resignation or death of an existing Director.
Change in Directors of a Company is an event-based compliance & it should be intimated to the Registrar of Companies within 30 days of passing of the resolution in the Board Meeting. There are some forms that are required to be filed with the RoC declaring Resignation, Appointment & Change in Directors of a Company. If you want help, then contact our team to file forms regarding the Change of Directors or any event-based compliance of a Company.
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 numbers of company 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 Year.
Documents Required for Change in Director of a Company
Following are the documents required for change in director of a Company:
- Latest passport size photos;
- PAN Card;
- Identity & Residence proof;
- DSC & DIN;
- Personal details like mobile number, email id, etc.
Step-by-step procedure for change in director of a Company
Following is the procedure for change in director of a Company:
Step 1: Apply for DIN: Before starting the procedure, you need to obtain the DIN of the Director in order to become a Director of a Company.
Step 2: Hold a Board Meeting: It is necessary to hold a Board Meeting for any change of Director in a Company. Whether there is an appointment, removal, resignation of a Director, or a consent from the Board Members is compulsory.
Step 3: Hold a General Meeting: A General Meeting must be held to take consent from the majority of members regarding the Company’s Director change.
Step 4: Filing of Form DIR-12: As per Section 152(5) of the Companies Act, 2013 with Rule 8 of the Companies (Appointment & Qualification of Directors) Rules, 2014, this form is required to be filed with the Registrar, within 30 days of appointment of a new Director of a Company.
Step 5: Resignation from the Directorship: A Director can resign from the Company anytime by giving a prior notice to the Company. The Company must intimate to the Registrar of Companies within 30 days from the Resignation Date in Form DIR-12.
Step 6: File Form DIR-11: According to the Section 168(1) of the Companies Act, 2013, this form must be filed to the Registrar of Companies for the purpose of intimating the Resigning Director.
Step 7: Hold a Board Meeting: For acceptance of resignation from the existing Director.
Note: Every resolution is required to be filed within 30 days of passing a Special Resolution in Form MGT-14 with RoC.