APPOINTMENT AND RESIGNATION OF DIRECTORS

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Have you ever wondered how the members of the board of directors get appointed or how do they leave their positions? Well, wonder no more, in this article we will tell you all about appointment and resignation of directors.

APPOINTMENT OF DIRECTORS

As per Section 149(1), every company shall have a Board of Directors consisting of Individuals as Director. (It is clear to understand from this line that only an individual can be director of company. Some persons have doubt that other than individual can be director or not). According to this section ONLY AN INDIVIDUAL can be director of company. {The Board shall consist of individuals not of other persons like firms, LLP, companies, gods or other legal persons.}

Minimum No. of Directors as per Section 149(1)(a):

  • Three in case of Public Company.

  • Two in case of Private Company.

  • One in case of One Person Company.

Procedure:

  • First Check whether Articles (AOA) of the Company contain power/authorization to appoint Director read with Section 161(1) of the Companies Act, 2013. {If there is no provisions in Articles of the Company, then Alter the Articles of the company to have enabling clause for appointment of Director.

  • Second Check whether such person have DIN No. or Not. If such person doesn’t have DIN No. then Apply for DIN.

  • Third following documents are required from Director to appoint him as Director.

  • Consent in writing to act as Director in Form DIR-2 pursuant to Rule-8 of Companies (Appointment & Qualification of Director) Rules, 2014

  • Intimation by Director in form DIR-8 in terms of Companies (Appointment & Qualification of Directors) Rules, 2014, to the effect that he/ she is not disqualified u/s 164(2) of Companies Act, 2014.

  • Advisable to take disclosure of Interest in Form MBP-1 pursuant to Section 184(1) read with Rule 9(1) of Companies (Meetings of Board and its Powers) Rules, 2014. {One thing should be noted MBP-1 should not be dated earlier than date of his/her appointment as Director}.

However, if there is nothing to disclose on the part of new Director, even then also require to take form MBP-1 from Director. [NIL disclosure is also a disclosure under  section 184(1)].

Fourth after receiving all the documents from the director:

  • Call the Board Meeting.

  • Pass Board Resolution for appointment of Additional Director and Extra-Ordinary Resolution for appointment of director other than Additional Director.

  • Issue Letter of Appointment.

  • File e-form DIR-12 [Along with DIR-2 + Letter of Appointment+ DIR-8+ Interest in    other entities.]

  • Make necessary entries in the Register of Directors along with their Shareholding, if any, maintained u/s 170 of Companies Act, 2013.

RESIGNATION OF DIRECTORS

1. The Director intending to resign shall send notice in writing to the Company. The resignation of a director shall take effect from:

  • The date on which the Notice is received by the company or

  • The Date, If Any, Specified by The Director in the notice, whichever is later.

2. The director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.

3. The law has caste duty upon the Director Resigning, to File Form DIR- 11 (Company shall file form DIR 12) and

  • Mention therein the Reason for Resigning.

  • Enclose the copy of Notice sent to the Company.

  • Enclose Proof Of Dispatch.

  • File the said form within 30 days of resignation along with the prescribed filing fees.

There is warning note at the end of the form which states as follows:

Note: Attention is also drawn to provisions of Section 448 and 449 which provide for punishment for false statement and punishment for false evidence respectively. These sections 448 and 449 relate to punishment for committing fraud or giving false evidence and these are non-compoundable offences.

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