Change in Director
Directors are appointed as per the provisions contained in the Companies Act 2013, and allied rules and regulations. Directors are appointment by the shareholders of the company to ensure conduct of day to day operations of the company, got executed in an efficient manner. Director’s are responsible for conducting the affairs of the company and have a fiduciary duty towards the company and its shareholders
Changes in composition of the Board of Directors is a regular ongoing process. Directors may get appointed, resign, or be removed due to various business, regulatory, or personal reasons. Further, the change in ‘Designation of the Director’ also take place re-currently. Ensuring that such changes are made in compliance with the Companies Act, 2013 and reported timely to the Ministry of Corporate Affairs (MCA) is crucial for maintaining corporate governance.
1. Legal Framework Governing Change in Director
1.1 Governing Law
- Companies Act, 2013
- Companies (Appointment and Qualification of Directors) Rules, 2014
- SEBI Listing Obligations and Disclosure Requirements Regulations (for listed entities)
1.2 MCA Forms Involved
- DIR-12 (for Appointment, Resignation, or Removal)
- DIR-2 (Consent to act as Director)
- DIR-8 (Intimation of Disqualification)
- MGT-14 (wherever applicable)
2. Types of Changes in Directors
Changes in directors can occur in the following ways:-
2.1 Appointment of Director
a. Appointment of Director may include Additional director, Alternate director, Nominee director, or Regular director
| Type of Appointment | Description |
|---|---|
| First-time Appointment | A new director joins the Board of Directors |
| Additional Director | Appointed temporarily by the Board; must be regularized at the next Annual General Meeting (AGM) |
| Alternate Director | Appointed to act in place of an existing director during his/her absence |
| Nominee Director | Appointed to the Board to represent another person or entity in compliance with legal or regulatory requirements |
b. Director’s can be appointed either by Board of Director in Board Meeting or by Shareholders in ‘Shareholder’s Meeting’
c. Procedure for Appointment of Director in Board Meeting:-
Obtain Director’s Consent and Declarations
Before the Board Meeting:
- Get the Consent to act as Director in Form DIR-2
- Get a declaration in Form DIR-8, confirming the person is not disqualified under Section 164
Issue Notice of Board Meeting
Issue a notice of Board Meeting to all directors at least 7 days in advance (unless a shorter notice is permitted) along with:
- Agenda
- Draft resolution
- DIR-2 and DIR-8 of the proposed appointee
Hold the Board Meeting
In the Board Meeting:
- Place the DIR-2 and DIR-8 before the Board
- Pass a Board Resolution for:
- Appointment of the director
- Authorization to file Form DIR-12 with the Registrar of Companies (ROC)
- If needed, fix date for General Meeting to regularize the appointment (for additional director)
d. Annual General Meeting/Extraordinary General Meeting
- Prepare and issue notice of General Meeting (AGM or EGM) with:
- An explanatory statement under Section 102 of the Companies Act.
- Draft of Proposed resolution to be passed for appointment
- Circulate the notice regarding the General Meeting (“GM”), may issue to the notice to all of the following: –
- Directors
- Shareholders
- Auditors
- The notice of the GM has to be given not less than 21 days prior to the date on which the GM is to be held.
- A shorter notice period can be given if and only if the consent is given by not less than 95% of the members who are entitled to vote at the meeting.
- The consent has to be obtained either in Writing or by Electronic Mode.
e. File Form DIR-12 with ROC (if applicable again)
- File Form DIR-12 with MCA within 30 days of the General Meeting: –
- If New Director is appointed, or
- If there is any change in designation or status (e.g., Additional Director to Director)
- Along the Form DIR-12, Attach:
- Certified copy of the Shareholders’ Resolution
- Minutes of the General Meeting (if required)
2.2 Resignation of Director (Section 168)
- A director may resign from his office by giving a notice in writing to the company.
- The company shall within thirty days from the date of receipt of notice of resignation from a director, intimate the Registrar in Form DIR-12 and post the information on its website, if any.
- The Company shall also place the fact of such resignation in the report of Directors laid in the immediately following general meeting by the company
- Director submits resignation letter to the company.
- Board Meeting to acknowledge resignation.
- 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.
- File Form DIR-11 (by resigning director) & Form DIR-12 (by company).
2.3 Removal of Director (Section 169)
- A Companymay, by ordinary resolution, remove a director, before the expiry of the period of his office after giving him a reasonable opportunity of being heard
- A special notice shall be required of any resolution, to remove a director under this section, or to appoint somebody in place of a director so removed, at the meeting at which he is removed.
- The companyshall send copy of Notice to the concerned Director, who shall be entitled to be heard on the resolution at the meeting.
- A vacancy created by the removal of a director be filled by the appointment of another director in his place at the meeting at which he is removed, provided special notice of the intended appointment has been given.
- A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not been removed.
2.4 Retirement by Rotation {Section 152(6)}
- In every Public Company, ‘Period of office’ of not less than two-thirds of the total number of Directors shall be
- Liable to determination by retirement of Directors by rotation
- Appointed by the company in general meeting
- The remaining one-Third be appointed by the companyin general meeting.
- At the Annual general meeting (After the meeting at which the first Directors are appointed), one-third of such of the Directors liable to retire by rotation, shall retire from office.
- The Directors to retire by rotation at every annual general meeting shall be those who have been longest in office since their last appointment.
- At the annual general meeting, the company may fill up the vacancy by appointing the retiring director or some other person thereto
- “Total number of Directors” shall not include independent Directors.
2.5 Change in Designation
- Director’s can have designation such as Director, Additional Director, Alternate Director, Managing Director, Whole time Director, Nominee Director, Director appointed in Casual Vacancy etc.
- Few Instances, where Change in designation of Director occasion may be:-
- Appointment of ‘Additional Director’ Regularised to ‘Director’ in AGM
- Change from Executive Director to Managing Director
- Change of ‘Executive’ to ‘Non-Executive’, etc.
- File Form DIR-12 with the Registrar of Companies (ROC) within 30 days of the change in designation
3. Appointment of a Director – Procedure
3.1 Step-by-Step Process
- Obtain DIN if not already allotted.
- Procure Digital Signature Certificate (DSC).
- Obtain consent in Form DIR-2.
- Convene Board Meeting to approve appointment.
- If required, obtain shareholder approval via Ordinary Resolution.
- File Form DIR-12 with ROC within 30 days of appointment.
- Update statutory registers and website disclosures.
3.2 Documents Required
- DIR-2 (Consent to act)
- DIR-8 (Declaration of non-disqualification)
- Board / Shareholder resolution
- PAN and Aadhaar (self-attested)
- DSC of proposed director and certifying professional
4. Resignation of Director – Procedure
4.1 Step-by-Step Process
- Director submits resignation letter to the company.
- Convene Board Meeting to take note of resignation.
- Company files Form DIR-12 with ROC within 30 days.
- Director may (optionally) file Form DIR-11 (filing by director)
- Update statutory registers and website.
4.2 Documents Required
- Resignation letter
- Board resolution
- Form DIR-11 (if filed by resigning director)
5. Removal of Director – Procedure
- Provisions contained under Section 169 of Companies Act, 2013
- Send Special Notice by a shareholder holding minimum 1% or more voting rights or shares worth ₹ 5 lakh.
- Give notice to the director to allow representation.
- Convene General Meeting and pass Ordinary Resolution.
- File Form DIR-12 within 30 days of removal
- Update statutory records.
6. Key Forms and Timelines
| Form No. | Purpose | Timeline |
|---|---|---|
| DIR-12 | Appointment / Resignation / Change of Director | Within 30 days of the event |
| DIR-2 | Consent to act as Director | Before appointment |
| DIR-8 | Declaration of non-disqualification | Before appointment |
| DIR-11 | Optional filing by resigning Director | Within 30 days of resignation |
| MGT-14 | Filing of Board / Shareholder Resolution | Within 30 days (if applicable) |
7. Required Documents & Forms
| Change Type | Forms to File | Documents Required |
|---|---|---|
| New Appointment | DIR-2 (Consent), DIR-12 | DIN, PAN, Aadhaar, Board Resolution |
| Resignation | DIR-11 (by Director), DIR-12 (by Company) | Resignation Letter, Board Resolution |
| Removal | DIR-12, MGT-14 (if applicable) | EGM Notice, Resolution, Minutes |
| Change in Details | DIR-6 | Updated Proof (Address, Name change, etc.) |
8. Consequences of Non-Compliance
8.1 Late Filing Fee
| Period of Delay | Penalty Amount |
|---|---|
| Up to 30 days | 2 times the normal fees |
| More than 30 days and up to 60 days | 4 times the normal fees |
| More than 60 days and up to 90 days | 6 times the normal fees |
| More than 90 days and up to 180 days | 10 times the normal fees |
| More than 180 days | 12 times the normal fees |
8.2 Invalid Appointment
Director appointment may be deemed invalid if consent or resolutions are missing.
8.3 Disqualification Risks
Involvement in non-compliant companies may lead to disqualification under Section 164. On Continuing Failure, Beyond the initial penalties, a company can also face a continuing failure penalty of Rs. 500 per day, subject to a maximum of Rs. 3 lakh.
9. Requisite of Corporate Consultant / Chartered Accountant
A Good Corporate Consultant / Chartered Accountant can provide complete assistance in managing director changes i.e., :-
9.1 Advisory on Board Composition
Ensuring compliance with Companies Act and SEBI guidelines.
9.2 Preparation of Legal Documents
Drafting board resolutions, appointment letters, consents, and notices.
9.3 Filing with MCA
Timely and accurate preparation and filing of DIR-12, DIR-11, MGT-14, etc.
9.4 DIN and DSC Procurement
Helping new directors obtain DIN and DSC seamlessly.
9.5 Compliance Monitoring
Alerting clients on due dates for filings, retirement by rotation, and annual disclosures.
10. Conclusion
Changes in the Board of Directors are strategic decisions that must align with corporate laws and regulatory filings. Timely and accurate filing of relevant forms such as DIR-12 is crucial to maintain the company’s legal standing and avoid penalties.
