A director is appointed as per the provisions of the Companies Act 2013 by the shareholders.
Change in Director
As per Section 2 (34) of the Companies Act, 2013 a “director” means a director appointed to the Board of a company. A director is a person appointed to perform the duties and functions of a director of a company in accordance with the provisions of the Companies Act, 2013.
A director is appointed as per the provisions of the Companies Act 2013 by the shareholders. The director has a fiduciary responsibility to act bonafide for the benefit of shareholders.
The shareholders have the discretion to appoint and remove a director. However, the director must be provided a reasonable opportunity of being heard.
The directors in the company can be changed anytime as and when needed. The director may voluntarily resign from the company or may be removed by the shareholders for non-performance of the duties or in case of death of the director.
A Director Can Cease To Be A Director In Two Situations
Resignation as per Section 168 of 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 within thirty days from the date of receipt of notice of resignation from a director, intimate the Registrar in Form DIR-12 and post the information on its website if any and shall also place the fact of such resignation in the report of Directors laid in the immediately following general meeting by the company.
Where a director resigns from his office, he may within a period of thirty days from the date of resignation; forward to the Registrar a copy of his resignation along with reasons for the resignation in Form DIR-11 along with the fee as may be prescribed under Companies (The Registration Offices and Fees) Rules, 2014.
Removal by the Shareholders as per Section 169 of Companies Act 2013
The Shareholders of the Company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard.
A special notice shall be required of any resolution, to remove a director under this section, or to appoint somebody in place of a director so removed, at the meeting at which he is removed.
A vacancy created by the removal of a director under this section may, if he had been appointed by the company in general meeting or by the Board, be filled by the appointment of another director in his place at the meeting at which he is removed, provided special notice of the intended appointment has been given.
A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not been removed.
3 Ways In Which Director Can Be Changed
Appointment of Director:
The Company shall convene Board Meeting for passing the resolution for Appointment of Director or Removal of Director, as the case may be.
After passing Board Resolution, the Company shall convene General Meeting.
At the General Meeting, the resolution will be passed subject to the approval of the shareholders.
Form DIR – 12 has to be submitted to the Registrar within 30 days from the appointment being made.
Resignation of Director:
The Director shall send the notice of resignation in writing to the Company.
The Company consider the Notice given by the Director and shall file DIR-12 within 30 days from the receipt of Notice.
However, the Director, on his discretion may file DIR-11 stating the reasons for resignation within 30 days from resignation.
Removal of Director:
The Company shall before removing the Director provide him/her a reasonable opportunity of being heard.
A special notice shall be served to the members for the General Meeting in which the Director has to be removed.
The General Meeting should be duly convened and members shall pass the resolution.
The Company shall file Form DIR-12 with the Registrar of Companies within 30 days from the date of passing resolution.
Forms To Be Filed With Roc
The Company shall file FORM DIR-12 within Thirty days from Appointment or Removal of Director.
However, the Director may file FORM DIR-11 within Thirty days from resignation along with the reasons for resignation.
Liability Of Director After Resignation
The director once resigned from the company cannot be held liable for the liabilities arising in the company after the acceptance of resignation by the Company
However, the Director shall be liable for the assets or overdrawn director loans taken from the Company and has resigned without paying these liabilities.
Conclusion
A Private Limited business is a legal entity unto itself. The director works on its behalf and performs managerial responsibilities. He also makes decisions for the organization and ensures that it is compliant. The company is represented by the Board of Directors. A company’s directors cannot be a body corporate, an association, a limited liability partnership (LLP), or a business.
Therefore it is of utmost importance to ensure that the directors of the Company act for the benefit of the Company as well as for its shareholders.
However, a director can only be appointed if he/she has obtained a Director Identification Number (DIN) and has Digital Signature.
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