Under the Companies Act, every Private Company should have a minimum of 2 Directors and a Public Company should have 3 Directors.
- Any company can remove a Director if
- they fail to meet any qualifications under the Companies Act or are absent from the Board Meetings for more than 12 months.
- They can also be disqualified if the court orders to do so.
The Procedure to Remove a Director
There are 3 circumstances where a Director can be removed
REMOVAL OF A DIRECTOR SUO-MOTO BY THE BOARD
- A notice has to be sent to the Members of the Board to notify the removal of Director.
- After the meeting, a resolution is passed for removing the director.
- After 21 days of passing this resolution, again a vote is taken to see the majority.
- After the Director is removed, the removed Director has to fill two forms, DIR-11 and DIR-12.
- The name of the director will be removed from the Ministry of Corporate Affairs after removal.
SELF-SUBMISSION OF THE RESIGNATION OF A DIRECTOR
- The director resigning has to send a 7-day notice to all other directors for a Board Meeting.
- A proper discussion has to be held to see if the resignation has to be accepted.
- Once the resignation is accepted, then the removal is accepted with an immediate effect.
- The resigning Director has to fill form DIR-11and DIR-12 to be relieved from their duties.
ABSENTEEISM OF THE DIRECTOR FROM 3 CONSECUTIVE BOARD MEETINGS
- Absenteeism will be taken as abandoning of office according to section 167 of Companies Act.
- A DIR-12 form is filled on behalf of the absent Director and his name will be removed from the Ministry of Corporate Affairs.
Frequently Asked Questions
What should I get before changing directors in a Private Limited Company?
Obtain consent of the entire Board
What to do, if the number of Directors in the Board is less than 2/3?
Appoint more directors to fulfill the requirements.
Can I resign myself from the Company?
Yes, a Director can resign voluntarily
Do I need another DIN, if I already have one?
No, you are not required to obtain another DIN
Can a Body Corporate be appointed as Director in the Company?
Only individuals can be appointed as directors in a company.
What should I do to remove a director from a company?
A meeting of all the Board members has to be held for their consent.
How to Transfer shares while the change of Director in the Company?
It can be done by executing the share transfer deed.
Can NRIs or Foreign Nationals be appointed as a Director of Private Company?
Yes, they can be appointed in the Board of Directors of a Private Company.
Does a Director need to subscribe to their shares for an appointment?
No, there is no requirement to do so.
Is DIR-12 important in the Removal of Director?
Yes, it is very important to file this form along with DIR-11
