The procedure for appointing or removing a director is regulated by the Companies Act, 2013 and the company’s governing documents.
Directors are officers of the company who are in charge of the management of the affairs of a company and make the decisions as to its operation on a day to day basis for the benefit of the shareholders. They are collectively known as Board of Directors or the Board. The Companies Act, 2013 requires that every company shall have a minimum number of 3 directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company. Accordingly, directors are the trustees of the company's money and property, and also act as agents in the transaction which they enter into on behalf of the company. Appointment and removal of the director in a company must be duly justified and approved by the shareholders of the company or Board of directors of the company, as the case may be.
It is compulsory for any Individual who is to be appointed as a Director for the first time to obtain Director Identification Number (DIN) allotted by the ministry of Corporate affairs after filing necessary documents.
An individual to qualify as a Director must be at least 18 years old and must give consent to serve as a director. A foreign National can also be appointed as a Director of an Indian Company.
A new Director can be added to the Board of Director by passing an ordinary resolution in an Annual General Meeting or an Extraordinary General Meeting. Ordinary resolutions can be passed by a simple majority.
A Company can remove a Director by passing an ordinary resolution in an Annual General Meeting or an Extraordinary General Meeting. Ordinary resolutions can be passed by a simple majority.
A casual vacancy caused by the removal of a director from a Private Limited Company having only two directors must be filled by the appointment of new director within 6 months from the date of resignation of previous director.
Every company shall keep at its registered office a register of its directors and key managerial personnel and shall make necessary entries in accordance with the provisions of Companies Act, 2013.