Introduction
Directors play a crucial role in the management and governance of a company, providing strategic direction and overseeing its operations. In India, the appointment, resignation, or removal of directors is governed by the provisions of the Companies Act, 2013, and the rules prescribed thereunder. Any change in the directorship of a company must comply with the statutory requirements and procedures prescribed by the regulatory authorities.
Key Procedures for Change in Director
Resignation of Director
-
Director's Resignation Letter: The director intending to resign must submit a resignation letter to the Board of Directors, specifying the effective date of resignation and reasons for resignation, if applicable.
-
Board Meeting: The Board of Directors must convene a meeting to consider and accept the resignation of the director. The resignation takes effect from the date mentioned in the resignation letter or the date of acceptance by the Board, whichever is later.
-
Filing with RoC: The company is required to file the Form DIR-11 with the Registrar of Companies (RoC) within 30 days from the date of resignation, intimating the RoC about the resignation of the director.
Appointment of Director
-
Board Resolution: The Board of Directors must pass a resolution for the appointment of a new director, specifying the category of directorship (executive, non-executive, independent, etc.), tenure, and any other relevant details.
-
Consent and Declaration: The proposed director must provide his/her consent to act as a director and furnish a declaration of compliance with the eligibility criteria and other requirements under the Companies Act, 2013.
-
RoC Filing: File the Form DIR-12 with the RoC within 30 days from the date of appointment, along with the necessary documents, such as consent letter, declaration, and Board resolution.
Change in Director's Details
-
Update in Director's Details: Any change in the director's particulars such as address, contact details, or other personal information must be intimated to the company and updated in the records maintained by the company and filed with the RoC.
-
RoC Filing: File the necessary form(s) with the RoC within the prescribed timelines, intimating about the change in director's details and providing updated information.
Removal of Director
-
Board Meeting: The Board of Directors must convene a meeting to consider the removal of a director and pass a resolution for his/her removal by a requisite majority.
-
Special Notice: A special notice must be served to the director proposed to be removed, informing him/her about the intention to consider his/her removal at the Board meeting.
-
RoC Intimation: File the Form DIR-12 with the RoC within 30 days from the date of removal, along with the necessary resolutions and documents.
Penalties for Non-Compliance
Failure to comply with the procedures for change in directorship, including late filing or non-filing of requisite forms with the RoC, can attract penalties and consequences, including:
01
Imposition of fines and penalties by the RoC for non-compliance with statutory requirements.
02
Prosecution of the company and its officers for defaults and violations under the Companies Act, 2013.
03
Disqualification of directors and the company itself from holding office or exercising certain rights under the Companies Act, 2013.
​Conclusion
Change in directorship is a significant event in the governance and management of a company, requiring adherence to statutory procedures and compliance with regulatory requirements. By following the prescribed procedures, maintaining accurate records, and filing necessary forms with the RoC within the stipulated timelines, companies can ensure smooth transition and compliance with the legal framework governing directorship in India. It is essential for companies to seek professional advice and assistance from qualified professionals such as Company Secretaries, Chartered Accountants, and Legal Advisors to navigate the complexities of directorial changes effectively and mitigate risks associated with non-compliance.