Appointment & Resignation of director
Director are brain of the company. They are the managerial staff who control and administer the company services a company refers to an artificial judicial person managed and run by natural persons called directors. The management of a company is vested on a company’s board of directors. A board of directors is a group of directors of one company, which are picked individually.
Adding a Director
A director is an individual appointed by the company’s shareholders to conduct the business of the company in accordance with the MOA as well as AOA. This aspirant for director post is required to have a Digital Signature Certificate (DSC) and for Director Identification Number (DIN).
There are no restrictions with regards to the eligibility for an individual to be a director of any company other than that the person must be above twenty one years of age. The AOA of a company should incorporate provision regarding appointment of a director. Under the Companies Act, 2013 there exists the provision which explains how a company can go about adding a director. According to the laws on emblems of the private company, it must be provided with at least two directors at the same time. But the total number of directors in the company can be up to fifteen only.
Requirements that make one qualified to become a director
Age Demarcation: There is however another fixed age for being a director but this should be a person who should be capable of entering into any contract. The person become eligible to be a director if he is 21 years and has not reached the age of 70 years.
Determination of Nationality: At least, there should be one director in the company.
DIN needed: What needs to be achieved here is to get a Director Identification Director that provide guarantee that there is no fraud by the director in case there is no DIN no then apply for the DIR3 form.
Limit of Valid Directorship: Even though a director can be 20 different companies at once at the same time, out of these 20 companies, only 10 may be public firms.
Election of director at the time of formation
The first director of the company if there are no before mentioned directors, then the original subscribers to the MOA and automatically directors of the company is the person who fit to be the director while registering the company with MCA.
Types of Director appointed in the Company
- Managing Director
- Executive Director
- Non- Executive Director
- Nominee Director
- Independent Director
Procedure of appointing a Director
During the incorporation
As per section 161 of the company Act, 2013 Checking AOA for Director Provision: The first criteria to consider is the person’s compliance of the AOA prior to appointing the director. The AOA should contain an ability concerning the appointment or the addition of a director. If there is no clause of addition of director in AOA then it is highly recommended that AOA must contain clause for addition of directors.
It is mandatory filing of Form DIR-2, Form DIR12 and MBP-1 at the ROC.
If it is necessary to have him as a director in the company then make the person as a director in the general meeting.
Subsequent Process
- It is time to call the Board Meeting.
- Passed a resolution noting the appointment of a director.
- The letter of appointment is to be issued.
- For the case of director’s appointment, the company has to submit Form DIR-12 to Registrar of companies within 30 days from the appointment.
- Other necessary entries that the company has to make include register of directors and Managerial personnel
Then the documents that may be required for appointment of directors include:
- Photograph
- PAN Card
- Proof of residency
- Digital signature Certificate
- Mobile number and personal email id can also be used by the purchaser as an identity proof Although not specifically stated, the purchaser would have to provide some proofs of identity While both of these identity proofs are compelling, the Mobile number and personal Email ID are preferred owing to the fact that they are more secured an are only used by the purchaser himself.
- If the director is non-resident of India then it is necessary to apostille all the documents.
Distinction between Resignation of the Director Under section 168 of the Companies Act, 2013
- A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company
- Notwithstanding then a director shall also forward a copy of his resignation along with details there in the reasons as a result of resignation to the Registrar within thirty days of the resignation in such manner as may be prescribed. The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later:
- The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later:
On condition that the director who has resigned shall still be held liable even after his resignation for the offences which were committed during his resign.
- This rule provides that if all the directors of a company resign from their offices, or vacate their offices under section 167, the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in general meeting.
Why Resignation from the company
- Dispute with the Board
- More beneficial Carrier Opening
- Misuse in the company Affairs
- Suspension due to Infringement
- The Recession of Infringement
Manner of Resignation of Directors
Letter of resignation to file form DIR11 defining the reasons behind the departure as per provisions of section 168(1) of the companies Act, 2013
As per rule 16 of the companies Rule, 2014 the resignation report or notice and ideas for the resignation has to share with the Registrar of the companies using DIR11 within 30 days of the date of removal
There are the basic documents that are required to be submitted for resignation of the director
- Documents given to the company to Annex C – resignation letter
- Proof of Dispatch
- Acknowledgment of form