Appointment and Removal of a Resident Director

1. A company’s paid-up capital is ₹100 crore or more, or its annual revenue is ₹300 crores or, more significant, at least one female director must serve on the board of directors
   
2. Independent director as defined by Section 149 (6)
   
3. Small shareholders nominate directors under Section 151
   
4. A corporation must have a resident director who lived in India for 182 days in the preceding year
   
5. Director appointed under Section 161
   
6. As per section 161(2), an alternative director can be chosen if the primary director is absent for at least three months
   
7. In mismanagement or persecution of the existing director, the Central Government or a third party may appoint nominated directors under section 161(3).
   

Appointment of a Director

Form DIR 2 – Director’s Consent

The first thing to be done to appoint a director in a firm is to get the proposed director’s permission. The proposed director’s approval to serve as a director in the firm must be submitted in Form DIR 2 along with the other required documents.

Get the Director’s DSC and DIN

The following step is to obtain the proposed director of the company’s Digital Signature Certificate (DSC) and DIN. If they do not already possess a DSC, they are obligated to apply for one from the relevant authorities in India.
When it comes to the Director Identification Number (DIN), if the director does not already have one, he must notify the company as soon as possible. The business must next adopt a decision and submit DIR Form 3 to apply for the proposed director’s DIN.

Call the Board and EGM

A general meeting of the firm is where decisions on the appointment of directors are to be taken. Accordingly, the firm will notify all its shareholders that it will be conducting an Extraordinary General Meeting, EGM.
After the notice to call for EGM is sent to all shareholders, the next step is to hold the meeting at the specified time and date and pass all the required resolutions for the director’s appointment in the company.

Letter of Appointment

Once the resolution has been approved, a letter of appointment will be sent to the new firm director. The appointment letter will outline the director’s salary and other benefits.

DIR-12 to ROC

Within 30 days after the Director’s appointment, the firm must submit Form DIR 12 and other supporting documentation to the Registrar of Companies, ROC.

Resignation of a Director

Elimination of the Directors

According to The Companies Act, 2013, a private limited company must have at least two Directors before officially beginning operations.

Except in circumstances of government appointment, shareholders can vote to remove a company director at the General Meeting. When one of the following conditions is met, a director of the firm may be removed:

1. If a director does any action that could result in disqualification under the Act
   
2. If a director has missed more than one year of Board meetings
   
3. If a director has announced a voluntary resignation
   
4. If a director is indefinitely suspended from participation by the court or the Tribunal
   
5. If a director commits violations of Article 184 by signing contracts
   
6. If a director is found guilty on charges and given a prison term of at least six months.
   

Alternate Director

In case of a foreign director not visiting India for a year, he/she has to appoint an ‘Alternate Director’ as a proxy director for receiving notices, attending meetings and voting. Company shall file DIR-12 for appointment and removal of an Alternate Director within 30 days of such an event.

Removal Process

Two situations in which a director may be removed from their position: if the firm decides to do so or if the director misses three consecutive board meetings. The removal process for both goes as follows; 

1. If the Board of Directors decides to remove the Director

The Board of Directors will be informed of any proposed removal of directors at least seven days in advance

The board will vote to call an extraordinary general meeting (EGM) and remove the director if they need shareholders’ agreement (SHA)

Seven days’ notice will be given before the company’s board members hold the next board meeting. The corporation has 21 days to issue this notice

The Board of Directors will deliberate on whether to dismiss the director at their next meeting

Before voting on the final decision, the director is free to make any arguments in their favor

Following the adoption of this resolution, two DIR-11 and DIR-12 forms will need to be submitted. The director submits the Board Resolution (DIR-12) to the ROC Filing (Registrar of Companies), while the company presents the DIR-11

The director’s name must be deleted from the MCA, Ministry of Corporate Affairs.

2. If the Director skips three consecutive Board meetings

If a director fails to attend three consecutive Board meetings during 12 months, per Section 167 of the Companies Act of 2013, they are deemed to have resigned. This 12-month period begins from the day they missed the first board meeting, even if notified in advance

If a director is absent and the FORM DIR-2 is submitted, it will be treated as though the director has resigned

Once this is done, the director’s name will be erased from the MCA’s online database.