Appointment of Directors
Every director shall be appointed by the company in general meeting,
Every person to be appointed as director is required to obtain Director Identification Number (DIN),
A person to be appointed as director shall furnish his Director Identification Number (DIN) & a declaration that he is not disqualified to become a director under the act. The sold person is to give his consent to act as a director in form DIR-2,
Company shall, within 30 days of appointment of director, file such consent with ROC in Form DIR-12 along with fee prescribed.
Rotation of Directors
Applicable only for public companies,
If the Articles of Association provided for retirement of all directors in the annual general meeting, then all the directors are liable to retirement as per that,
As per Section 152(6) of Companies act, 2013, 2/3rd of total number of directors are liable to retire by rotation and those directors are called as retiring partners.
Out of retiring partners (2/3rd of total number of directors), 1/3rd of directors need to vacate the office.
Calculation of Total number of directors liable to retire
Total directors in the company XXX
Less: Nominee director appointed by Central Government
and any Financial Institution XXX
Less: Additional Directors XXX
Less: Alternate Directors XXX
Less: Independent Directors XXX
Less: Small Shareholders Directors XXX
Total number of directors on which number of retiring
partners need to calculate XXX
Let's take an example;
There are 20 directors in the company out of which 3 are independent directors and 2 directors appointed by Central Government. Calculate number of directors to be retire in AGM.
Total directors of company 20
Less: Independent Directors 3
Less: Directors appointed by Central Government 2
Remaining Director on which 2/3rd is to be calculated 15
Retiring Directors = 15*2/3 = 10 directors
Actual Directors to be retire = 1/3rd of retiring directors
= 10*1/3 = 3.33 = 4 (rounded off to nearest digit)
The director who were in the office for the longer period is liable to retire first. If two or more directors appointed on the same day then directors will be retire from mutual understanding between them and if mutual understanding is not done then they retire by lots.
Re-appointment of Director
If any director retired from company may be re-appoint in the general meeting.
Person who is or has been a director of a company which:
(a) has not filed financial statements or annual returns for any continues period of 3 financial years, or (b) has failed to repay the deposits accepted by it or pay interest or to redeem any debentures on the due date, or (c) pay interest due thereon or pay any dividend declared & such failure to pay or redeem continues for one year or more, shall not be eligible to be re-appointed, as director of that company or appointed in other company for a period of 5 years from the date on which said company fails to do so.
Resignation of a Director [Section 168]
A director may resign from his office by giving a notice in writing to company,
Forward a copy of resignation along with reason to Registrar, within 30 days from the date of resignation, in Form DIR-11 along with the fee;
Foreign Director may authorize a practicing CMA/CA/CS or any other residential director to sign Form DIR-11 in writing and file same on his behalf;
On receipt of notice board take notice of the same;
Company intimate ROC, within 1 month of receipt of notice in Form DIR-12;
That information is to be posted on website of the company;
Resignation of director shall effect from from the date on which notice is received by the company or any date specified by the director, whichever is later;
Director who has resigned shall be liable even after his resignation for the offenses occurred during his/her period.
Where all director resign from their offices, Central Government shall appoint required number of directors, who hold the office till the directors are appointed by the company in General Meeting. Removal of Director
Company may remove director by passing Ordinary Resolution. Company cannot remove director appointed by National Company Law Tribunal (NCLT). Independent directors if reappointed for 2nd term shall be removed by Special Resolution only. Procedure to remove a director & to appoint another director in place of removed director (Section 169): (a) A special notice is required to remove a director or to appoint somebody in his place [Section 169(2)]. (b) Company send the notice to the concerned director and an opportunity of being heard is given to him at meeting[Section 169(3)]. (c) If concerned director wants to make representation, he shall given it in writing to company and request to notify it to the member. Company shall state it in notice and send the representation along with notice to the member. If representation is not sent due to insufficient time or company's default, representation shall be read out at meeting [Section 169(4)]. (d) Vacancy created by removal of director can be filled by appointment of another director at the same meeting, if special notice is given under section 169(2)
[Section 169(5)].
(e) Director so appointed in place of removed director shall hold office till date upto which removed director have to hold office [Section 169(6)].
(f) If vacancy is not filed at the same meeting, it shall be filed as casual vacancy. Director removed cannot be re-appointed [Section 169(7)].
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