{"id":6951,"date":"2019-11-02T09:00:38","date_gmt":"2019-11-02T03:30:38","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=6951"},"modified":"2023-03-18T17:21:48","modified_gmt":"2023-03-18T11:51:48","slug":"the-procedure-for-appointment-and-resignation-of-directors","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/the-procedure-for-appointment-and-resignation-of-directors\/","title":{"rendered":"The Procedure for Appointment and Resignation of Directors"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Section 168 of Companies Act, 2013 provides a clear picture of the appointment and resignation of directors which wasn\u2019t covered previously in the Companies Act, 1956. Since a company do not have a physical existence, it gets recognised as an artificial person to whom only a natural person can bring into life. Therefore a person who takes in charge of regulating the company\u2019s operations, he is known as the director. &nbsp;Different directors are responsible for handling various aspects of the company. So, this blog will give a comprehensive analysis of numerous types of directors, along with their appointing and resigning process.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a30807786e32\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a30807786e32\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/the-procedure-for-appointment-and-resignation-of-directors\/#Types_of_Director\" title=\"Types of Director \">Types of Director <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/the-procedure-for-appointment-and-resignation-of-directors\/#Common_Reasons_behind_Resignation_of_Directors\" title=\"Common Reasons behind Resignation of Directors \">Common Reasons behind Resignation of Directors <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/the-procedure-for-appointment-and-resignation-of-directors\/#Appointment_and_Resignations_of_Directors_at_the_same_time\" title=\"Appointment\nand Resignations of Directors at the same time\">Appointment\nand Resignations of Directors at the same time<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/the-procedure-for-appointment-and-resignation-of-directors\/#Resignation_of_the_Director_under_Section_168\" title=\"Resignation of the Director\nunder Section 168 \">Resignation of the Director\nunder Section 168 <\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Director\"><\/span>Types of Director <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The directors of a company\ndiffer in terms of the role they play, such as managing director who\nruns the overall functions of the company, executive directors who look after\nthe day to day processes, and independent directors who ensure good governance\nof the company.&nbsp; Thereby, one company can have multiple directors; however,\nthe appointment of directors also depends on the type of company like:<\/p>\n\n\n\n<ul><li>As per <a rel=\"noreferrer noopener\" aria-label=\"Section 149(1) (opens in a new tab)\" href=\"https:\/\/incometaxindia.gov.in\/Acts\/Income-tax%20Act,%201961\/2015\/102120000000041056.htm\" target=\"_blank\"><em>Section 149(1)<\/em><\/a> of the Companies Act, 2013 every public company shall have a minimum number of 3 directors, whereas the minimum number of directors in a private company are 2 and only one director in case of the One Person Company.<\/li><li>The maximum number of directors in a public company is 15. Besides, a company can also appoint more than 15 directors after getting a permit from special resolution in the general meeting. The process of appointment of more directors does not require the approval of the Central Government.<\/li><li>A director can administer the maximum number of directorships up to 20, inclusive of any alternate directorship of a person.<\/li><li>&nbsp;In the case of any private company or public company, the either holding or subsidiary company shall restrain to10 directorships in the public company.<\/li><li>All the listed companies must appoint at least one woman director in the Board of Directors within a year from the commencement of the second Proviso to Section 149(1) of Companies Act. <\/li><li>Likewise, every public company having a turnover of Rs. 300 Crore or a paid-up share capital of Rs. 100 crores under the latest audited financial statements, shall appoint at least one woman director within a year from the commencement of the second Proviso to Section 149(1) of Companies Act.<\/li><\/ul>\n\n\n\n<div class=\"shadow5\"><p><strong>Note: <\/strong>\u201cIf any person holds the responsibility of director in more than 10 or 20 companies before the commencement of Companies Act, then he shall have to choose the companies where he wishes to continue or resign as the director within one year from such commencement. After that, he shall inform about his decision to the chosen companies as well as the concerned Registrar. <\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Common_Reasons_behind_Resignation_of_Directors\"><\/span>Common Reasons behind Resignation of Directors <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There can be many reasons for resigning the position of\ndirector and choosing another option. Let\u2019s perceive some possible reasons\nbehind the resignations of directors:<\/p>\n\n\n\n<p><strong>Conflict with the\nBoard- <\/strong>When many directors work together, a difference of opinion\nought to happen. It results in hampering the overall performance of the\ncompany; in such a situation, the directors may choose to resign.&nbsp; <\/p>\n\n\n\n<p><strong>Better Career Opportunity-\n<\/strong>Everyone seeks for a better career opportunity to enlarge their domain, and\nchoose that option which drives their inner aspirant. Similarly, the directors may resign if they get better opportunities or some\nventure wherein he got appointed as a director by AOA.&nbsp;&nbsp;<\/p>\n\n\n\n<p><strong>Distortion in the\nCompany Affairs-<\/strong> When a director gets acquainted with the illegal\npractices of the company, he may find himself getting dragged into it that\nbecomes his reason for resignation. To protect himself from personal liability\ncoming out of such activities, he decides to resign. <\/p>\n\n\n\n<p><strong>Expulsion due to disobedience- <\/strong>Any non-adherence, contravention or defaults on the director\u2019s end can lead him into trouble. In that kind of scenario, the Board may want him to leave the office. Sometimes the <strong><a href=\"https:\/\/swaritadvisors.com\/removal-of-director\">removal of director<\/a><\/strong> may shape as the face of resignation in which the company give the director a benefit to resign instead of throwing him out directly.<\/p>\n\n\n\n<p><strong>Withdrawal of nomination-\n<\/strong>It is only applicable to the Nominee directors who mostly get appointed\nby the NBFC\u2019s investors on the BOD. Once the transaction amid the company and\nentity is complete, the Nominee director can resign, or he may also resign after\nthe withdrawal of nomination. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Appointment_and_Resignations_of_Directors_at_the_same_time\"><\/span><strong>Appointment\nand Resignations of Directors at the same time<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Imagine a situation in which all the directors of a company resign at the same time, sounds horrifying right? In such a case, two scenarios of appointment and <strong>resignation of Director<\/strong> are applicable, which are as follows:<\/p>\n\n\n\n<ul><li><strong>Resignation of Director<\/strong><\/li><li><strong>Procedure for the Resignation of&nbsp; director \u2013 (Normal Case)<\/strong><\/li><\/ul>\n\n\n\n<p>Section 168 of the Companies Act, 2013, defines the method for\nthe resignation of the directors as below- &nbsp;<\/p>\n\n\n\n<p>As per the Section, a notice has to be served by the director\nof the company notifying about his reason for departure. Also, the director has\nto fill a Form DIR- 11 under his digital signature.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Resignation_of_the_Director_under_Section_168\"><\/span>Resignation of the Director\nunder Section 168 <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 168 has issued the following guidelines for the\nresignation of directors:<\/p>\n\n\n\n<ul><li>A director may resign from his office by providing written notice to the company. After receiving such notice, the Board shall take note of the same, and the company shall intimate the Registrar in such a manner, time, and form as prescribed. Provided that-<\/li><li>The company shall place the fact of such resignation in a report of directors immediately after the general meeting of the company. <\/li><li>The director shall also forward a copy of his resignation along with a precise reason for his resignation to the Registrar within 30 days of resignation the prescribed manner.<\/li><li>&nbsp;The resignation of a director shall take its effect from the date on which the company received his notice or from the specified date mentioned by the director in the notice, whichever comes later: Provided- that the director who has resigned shall be liable for the offences which happened during his tenure even after the resignation.<\/li><li>When all the directors of a company resign at the same time, then the promoter or the Central Government shall appoint the required number of directors during which old directors have to hold company until the new ones get appointed by the company in general meeting.<\/li><\/ul>\n\n\n\n<p><div class=\"shadow4\">The revised Companies Act has made the procedure for the resignation of directors  more lucid and favourable for directors. It enables some easy departure options for directors. Lastly, it differs in each case with the reliance on AoA and the approval of the Board. &nbsp;&nbsp;&nbsp; <\/div><\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-removal-of-director-disqualification-under-section-164\/\" target=\"_blank\" rel=\"noopener noreferrer\">What is the Procedure for Removal of Director Disqualification under Section 164?<\/a><\/mark>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 168 of Companies Act, 2013 provides a clear picture of the appointment and resignation of directors which wasn\u2019t covered previously in the Companies Act, 1956. Since a company do not have a physical existence, it gets recognised as an artificial person to whom only a natural person can bring into life. Therefore a person [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":6952,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[380],"tags":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6951"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=6951"}],"version-history":[{"count":7,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6951\/revisions"}],"predecessor-version":[{"id":19104,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6951\/revisions\/19104"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/6952"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=6951"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=6951"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=6951"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}