Director Change

A director in a company serves as a key figure appointed by shareholders to oversee the company’s operations, in alignment with the guidelines set out in the Memorandum of Association (MOA) and Articles of Association (AOA). Since a company is a legal entity and cannot act independently, it operates through natural persons, namely the directors. These directors form the Board of Directors, entrusted with the company’s overall management.

Directors are particularly crucial in a Private Limited Company, where they are responsible for daily decision-making and managing the company’s affairs. Shareholders entrust directors with the significant task of managing their investments efficiently, and the shareholders’ needs and demands often drive the process of appointment of director.

Directors within a company are differentiated into several categories, reflecting their distinct functions and duties. The principal types are:

Executive Directors

These individuals are deeply engaged in the company’s routine operations and management. They typically occupy specific executive positions like Chief Executive Officer (CEO), Chief Financial Officer (CFO), or Chief Operating Officer (COO), playing a pivotal role in the strategic and operational decisions of the company.

Non-Executive Directors

In contrast to executive directors, non-executive directors do not partake in the company’s day-to-day management. Their role is more about providing objective oversight, contributing to the board’s decision-making processes, and bringing in external perspectives and expertise.

Independent Directors

Falling under the broader category of non-executive directors, independent directors are distinguished by their lack of material or pecuniary relationships with the company or its management, ensuring their ability to make unbiased judgments. Their fundamental duty is to protect the interests of the shareholders, ensuring transparency and fairness in the company’s governance practices.

In a Private Limited Company, the law mandates a minimum of two directors and permits up to fifteen. Should the company require more than this cap, it can appoint extra directors by passing a special resolution, which requires the approval of more than 75% of voting shareholders. Sometimes, a company may need to augment its board of directors to cater to evolving business requirements or to address shareholder expectations. Nonetheless, every appointment of a director must be conducted following the stipulations of the Companies Act 2013 to maintain legal compliance.

The appointment of a director necessitates the submission of specific documents:

  • PAN Card: The director’s Permanent Account Number card is mandatory.
  • Proof of Identity: Acceptable identification includes Voter ID, Driving License, Aadhaar Card, and similar documents.
  • Residential Proof: Documentation confirming the director’s residence, like utility bills or rental agreements.
  • Recent Passport-Sized Photo: A current passport-sized photograph of the prospective director.
  • Digital Signature Certificate (DSC): Required for the electronic signing of documents.