How to Add/Remove a Director in Private Limited Company?

Last Updated On: Nov. 21, 2021, 8:54 p.m.
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HOW TO ADD/REMOVE A DIRECTOR IN A PRIVATE LIMITED COMPANY?

 

As per the Companies Act, a Director is someone who administers, controls, or directs something, especially a member of a commercial company; or one who supervises, controls or manages; or a person who is elected by the shareholders of a company to direct the company’s policies; the person appointed or elected according to law, or who are authorized to manage and direct the affairs of a company.

However, for a person to become a director at the time of private limited company registration, he/she is required to have a Director Identification Number (DIN Number). DIN Number can be obtained from any person who is over the age of 18 by applying to the DIN.

 

What is Director Identification Number (DIN)? 

Director Identification Number (DIN) is unique 8 digit number. This number is allotted by the Central Government to any person who is going to be a Director or is an existing director of a company and obtaining a DIN is a very easy task. The DIN number has lifetime validity. 

 

What are the types of Directors in a private limited company?

Executive Directors:  A full-time working director with higher province towards the organization. Non-Executive Directors: Non- working director, not involved in the everyday working of the company but take part in the policy-making or planning process.

Independent Directors: Expertise and experienced director who gives expert advice to the board when needed but have no direct relationship with the company. 

Additional Directors: An individual who can take the position and acts as a director until the next Annual General Meeting.

Alternate Director: An alternate director comes on board when a director is absent for more than 90 days or three months for a temporary period. 

Nominee Director: The central government or the Shareholders or third parties appoint them. when there is mismanagement or the board members misuse their responsibility.

 

 

How to add Add/Remove a Director?

 

Process for adding a Director in Private Limited Company

1) To appoint a director in a company, the first step is to take a consent letter from the other directors of the company in DIR-2 along with ID and address proof. Apart with this, other forms such as disclosure of interest in MBP-1 DIR-8 declaration should be gathered from the proposed Directors.

2) Analysing AoA or Articles of Association of the company to understand the procedure to add a director, whether the appointment of a director can be done only by conducting a meeting of the shareholders or whether the Articles of Association holds the option to the Board to appoint a Director who can be affirmed in the next General Meeting.

3) The director of the company can only be appointed by the shareholders, then the Directors have to conduct a shareholders meeting, depending on the time, it can be company’s Annual General Meeting or the Extra Ordinary General Meeting. Notice for such a meeting should hold all the details for the concern process, such as the agenda of appointment of Director with the consent letters and other needed documents.

4) Director of the company can be appointed by Board Meeting or by passing circulation after resolution. In both cases, Notice for such a meeting should hold all the details for the concern process, such as the agenda of appointment of Director with the consent letters and other needed documents.

5) Once after passing the resolution in either of the above cases, an appointment letter is prepared for the confirmed director and then filing of Form DIR -12 has to be done within the time period of 30 days of the passing of the resolution.

 

Process for removal of Director in Private Limited Company:

(a) Ensure that the notice for removal of a director is for a director other than a director appointed by the Tribunal under section 242 of the Companies Act, 2013.

(b) Ensure that the director of whose removal notice has been received is not a director who was appointed under section 163 with the principle of proportional representation.

Immediately after receiving of the notice of the intention to move any resolution for removal of a director, the company, shall give notice of said resolution to the members of the company in the same way as it gives notice of the meeting.

in case if it is not possible for the company to publish an advertisement, then the company can give notice to all the members of the Company, in the newspaper having an appropriate circulation within a period of not less than 7 (seven) days before the date of meeting.

On receipt of notice, send copy of such notice to the director concerned and intimate him about his entitlement of an opportunity of being heard in general meeting.

Prepare notice of board meeting along with draft resolution(s) to be passed in the board meeting.

Send notice of board meeting to all the directors:-

  • atleast 7 (seven) days before the date of board meeting or
  • in such manner as prescribed under section 173(3) of the Companies Act, 2013 and clause 1 of the Secretarial Standard-1.

Convey the board meeting and pass board resolutions for:

  • Removal of director subject to the approval of shareholders in general meeting by way of ordinary resolution.
  • Fix day, date, time and venue for calling general meeting and
  • Approve the notice of general meeting

Prepare draft minutes of the board meeting and circulate, within a period of fifteen days from the date of conclusion of that meeting, to all directors, for their comment(s).

All directors shall communicate their comment(s), if any, on the draft circulated minutes within a period of seven days from the date of circulation of the draft minutes.

Add the suggested comment(s) given or suggested by any director and finalize the minutes.

Enter the minutes, in the minute book of the board meeting, within thirty days from the date of conclusion of the board meeting.

Minutes of the board meeting shall be signed and dated by the chairman of that meeting or by the chairman of the next meeting.

The signed minutes duly certified by Company Secretary/any director where Company Secretary is not appointed shall be circulated within 15 days of signing to all the directors as on the date of meeting or appointed thereafter, except those directors who have waived to receive such signed minutes.

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