Change in Director

Change in Directors of a Company in India

Overview

A company’s Board of Directors is crucial for its decision-making and smooth functioning.
Sometimes, it becomes necessary to appoint a new director, remove an existing director, or change the designation due to business needs, compliance requirements, or personal reasons of the directors.
In India, changes in directors must be done in compliance with the Companies Act, 2013 and reported to the Ministry of Corporate Affairs (MCA).

Reasons for Change in Directors

• Appointment of a new director for business expansion.

• Resignation of an existing director.

• Disqualification or removal of a director.

• Change in designation (e.g., from Additional Director to Director).

• Non-compliance with the minimum or maximum number of directors.

Types of Director Changes

1. Appointment of Director

• Can be done in Annual General Meeting (AGM) or Extraordinary General Meeting (EGM).

• May include appointment of:

  • Additional Director

  • Alternate Director

  • Independent Director

2. Resignation of Director

• A director may resign voluntarily by giving written notice to the company.

• The company must file the DIR-12 form with MCA within 30 days.

3. Removal of Director

• A director can be removed before the expiry of their term by passing an ordinary resolution in a general meeting.

4. Change in Designation

• For example, promoting an Additional Director to a Full-time Director.

Procedure for Change in Directors

1. Board Meeting

   • Pass a resolution to propose the appointment, resignation, or removal.

2. Consent or Resignation Letter

   • Obtain the required documents from the incoming or outgoing director.

3. Filing with MCA

   • File Form DIR-12 (mandatory for any change in directors).

4. Update Statutory Records

   • Update the company’s Register of Directors and Key Managerial Personnel.

5. Public Disclosure

   • Reflect the change in the company’s official documents and website (if applicable).

Documents Required

For Appointment:

• Director’s Digital Signature Certificate (DSC).

• Director Identification Number (DIN) or application for DIN (Form DIR-3).

• Consent to act as Director (Form DIR-2).

• ID and address proof.

For Resignation:

• Resignation letter from director.

• Board resolution accepting resignation.

• Acknowledgment of filing with MCA.

Timeline

• All changes must be filed with MCA within 30 days of the event.

• Delay may attract penalties.

Importance of Compliance

Failure to comply with MCA requirements for change in directors may lead to:

• Monetary penalties.

• Disqualification of directors.

• Legal consequences for the company.

Professional Help for Director Change

Changing directors involves legal documentation, resolutions, and timely MCA filings.
A professional can help ensure:

• Correct form filing without errors.

• Compliance with all provisions of the Companies Act.

• Avoidance of penalties or rejection by MCA.