The board of directors can add or remove a director based on provisions in the Article of the Association.
Directors are appointed by the shareholders of a company for the management of the company. A Private Ltd. Company is required to have a minimum of 2 directors and a Public Ltd Company is required to have a minimum of 3 directors.
According to Section 260 and 284 of the Companies Act, the Board of Directors has the right to add a new director or remove an existing director. The person appointed by the Board of Directors should be eligible as per the relevant clause in the articles of association. The appointed director must give the consent to be a director in the written form.
The appointed director must apply for a director identification number by filling E-form DIN 1. Then a resolution that needs to be passed by the Board of Directors contains the approval of the director to comply with all the regulations of the government of India. Once the approval is done then the DIN-12 form should be submitted with the Registrar of Companies (RoC).
If an existing director incurs any of the disqualifications that have been specified under act of association or if the one is not present in the board of director meetings since last one year, sentenced to imprisonment for not less than 6 months, convicted for a crime in court or if the one enters in contracts against the provisions of act 184, then in such cases, the board of directors can remove an existing director.
Reasons for removal of director:
Following can be the reasons for the removal of directors:
- Dispute with Board
- Misuse in the Company Affairs
- Suspension due to Infringement
- The Recession of Nomination
In certain cases, the director can be fired before the expiration of the office period of the one. First of all, a special notice to remove a director should be send by the board of directors of the company.
The director shall be heard on the resolution at the meeting whether he is a member of the company or not. For 10 days, the company needs to wait for the reply. If a director does not reply within 10 to 25 days then one can be removed without it.
- Minimum Requirement: To become the director of a company, a person must be at least 18 years of age and possess Director Identification Number (DIN).
- Director Identification Number: DIN is a unique number allotted by the Ministry of Corporate Affairs for any person who is a director of a company.
- Limit of Valid directorship: A person can only be a director of 20 separate companies at a time. Out of these 20 companies, only 10 can be Public Companies.
- Unsound mind or Bankrupt Person: Anybody is of unsound mind or incompetent of taking decisions on own cannot be appointed as a director. Also, a person who is bankrupt is disqualified from acting director.
- Criminal Background: If a person has a criminal record and was sentenced to confinement for more than 7 years, he cannot be a director.
- Pending Overdue returns: If the individual has not met previous returns in any of the preceding years, he shall be barred from keeping the directorial position.
Following are the documents required:
- Passport size photo of the director to be appointed.
- PAN Card of the director to be appointed.
- Proof of residence of the director to be pointed.
- Digital Signature Certificate of the continuing director and director to be removed.
- Mobile number & e-mail id of director.
- Notice of resignation filed with the company.
- Proof of dispatch
- Acknowledgement form, if received.
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