Overview of Appointment and Resignation of Director

It is well said that Directors are the brain of the company. They are the managerial staff who control and administer the company’s services. The revolution of directors takes place in one or another way – either by the selection of new director or withdrawal of existing. Endeavor to carry out the change of directors is always to guarantee an optimum blend of experts on board for the interest of the company. The authorization to approve the resignation of the director lies with the parts of BoD, whereas the appointment must be made through the consent of shareholders. Whether it is an appointment, removal, or resignation, the change does not take effect continuously; the intimation is made to ‘Ministry of corporate affairs.’

What is the Eligibility Criteria to be a Director?

There are no designated qualifications, but an individual should comply with the following mentors be a director:

However, according to the law, a specific natural person only can be a director of any company.

Age Demarcation

There is no alternate fixed age for being a director, but it is essential that the person who should be competent to enter into any contract. Moreover, in a matter of ‘managing director,’ ‘full-time’ director, or ‘independent’ director of a recognized company, the person becomes eligible to be a director if he is of 21 years and has not reached the age of 70 years officially.

Determination of Nationality

There is no restriction. However, there must be a minimum of one Indian director in the company.

DIN Needed

To be eligible to be designated as a company’s director, the person must get a Director Identification Number. The main intention behind having a DIN is to make assured that fake directors do no fraud, and in case anyone ventures any such criminal activity, they can be traced within this unique number.

Limit of Valid directorship

A personality can only be a director of 20 separate companies at a time. Out of these 20 companies, only ten can be public companies.

Ineligibility

Unsound mind or bankrupt person

Anybody who is of unsound mind or is incompetent of making decisions on his own cannot be appointed as a director. This involves children, mentally disabled individuals, and frames with unstable mental faculties. Furthermore, insolvent people or individuals who have maintained bankruptcy claims in the court of law are disqualified from acting directors.

Criminal background

If a personality has a criminal record and was sentenced to confinement for more than seven years or more, he cannot be a director.

Pending overdue returns

If the individual has not met previous returns in any of the preceding years, he shall be barred from keeping the directorial position.

Recognition: Types of Director

The directors of a company change in terms of the role they play, such as managing director who runs the overall purposes of the company, executive directors who look after the day to day methods, and independent directors who assure proper governance of the company. Thereby, one company can have increased directors; nevertheless, the appointment of directors also depends on the type of business like:

• As per ‘Section 149(1)’ of the Companies Act, 2013, every public corporation shall have a minimum number of 3 directors, whereas the least amount of directors in a private company is two and only one director in case of the ‘One Person Company.’
• The highest number of directors in a public company is 15. Besides, a company can also select more than 15 directors after getting a permit from a specific resolution in the general meeting. The method of appointment of more directors does not expect the endorsement of the Central Government.
• A director can determine the maximum number of directorships up to 20, including any alternative directorship of a person.
• In the event of any private company or ‘public company,’ either holding or subsidiary company shall restrict to10 directorships in the ‘public company’.
• All the Certified companies must appoint at least one woman director in the Board of Directors in a year from the enforcement of the second Proviso to Section 149(1) of Companies Act.
• Similarly, every public company having a turnover of Rs. 300 Crore or a paid-up portion capital of Rs. One hundred crores under the latest audited financial statements shall appoint at least one woman director within a year from the convocation of the second Proviso to Section 149(1) of Companies Act.

Note: If any person holds the efficiency of director in more than 10 or 20 companies before the commencement of Companies Act, then he shall have to determine the companies where he wishes to maintain or resign as the director within one year from such beginning. After that, he shall inform about his decision to the chosen companies as well as the concerned Registrar.

Short Note: Appointment and Resignation of Directors

Section 168 of Companies Act, 2013, implements a clear picture of the appointment and resignation of directors, which wasn’t satisfied previously in the Companies Act, 1956. Since a business does not have a physical presence, it gets identified as an artificial person to whom only a natural person can bring into life. Consequently, a person who takes charge of managing the company’s operations is known as the director. Different directors are qualified for handling various aspects of the company.

Why Add and Switch?

• Get fresh talent on Council
• No Compulsion of Ownership
• The incompetence of existing directors
• To meet the sanctioned