Company Director is appointed by the shareholders for the management of the company. A Private Limited Company has a minimum of two Directors and a Limited Company is required to have a minimum of three Directors. On the other hand, a Limited Liability Partnership (LLP) has Designated Partners and Limited Liability Partnership Act, 2008 requires each LLP to have a minimum of two Designated Partners. Due to various reasons, appointment or removal of a Director or Designated Partners is thus required.
The Articles of Association (AoA) of a company is the main authority from where the Board of Directors draws the right to add new directors or remove the existing ones from the Board. The Company director appointed must be eligible according to the relevant clauses in the Articles of Association (AoA) and must give his consent to be a director in writing; which the company must register with itself. The Articles of Incorporation must be provided for the addition of Directors.
PROCEDURE
The appointed director must apply for a Director Identification Number (DIN) by filing the E-Form; DIN-1 with the Ministry of Corporate Affairs (MCA).
The Board must pass a resolution, approving the appointment of the new director. Once this is done, the filing of Form DIR-12 with the Registrar of Companies is required.
If the company director incurs any of the disqualifications that are specified under the Act, or absents himself from the board meetings for more than 12 months, or enters into any contract or arrangements against the provisions mentioned in section 184, is disqualified by an order of a court or Tribunal, or is convicted by court for any offense and sentenced to imprisonment for not less than six months is removed by the company.
PROCEDURE
The company director can be removed before the expiry of his term, by passing an ordinary resolution, provided he does not hold office for life. The special notice of the resolution regarding the removal of a director must be sent by the company to the director concerned.
The director shall be then entitled to be heard on the resolution at the meeting.
The company must wait for an explanation from the director. If no reply is received, the special notice is given and, through the member’s approval, the director can be removed. Filing of the form the DIR-12 with the Registrar of Companies is required. The director will be removed within 10 to 15 days.
Every Limited Liability Partnership (LLP) must have at least two individuals acting as designated partners. These partners must have a Designated Partner Identification Number (DPIN) and their names featuring in the LLP agreement.
PROCEDURE
The applicant should apply for a DPIN if the proposed designated partner does not have one. If the partner already has an existing DPIN, the same can be used. The resolution must be passed; approving the appointment of the designated partner, FORM 4 must be filed for a change in a partner and FORM 3 for the amendment in the LLP Agreement.