Appointment, resignation and removal of a director: the process

• An individual aged 18 or above with a Director Identification Number. A company or firm cannot be a director.
• Not disqualified under section 164: not an undischarged insolvent, not of unsound mind, not convicted and sentenced to six months or more within the last five years, not a director of a company that has failed to file financial statements or annual returns for three consecutive years, and not holding more than 20 directorships, of which at most 10 in public companies.
• Foreign nationals and non-residents can be directors. Every company must have at least one director who stayed in India for 182 days or more in the financial year. A national of a country sharing a land border with India needs security clearance before a DIN is allotted.

A private company needs at least two directors, a public company three, a one person company one; the maximum is fifteen unless a special resolution raises it.

1. DIN and digital signature. A person without a DIN applies in Form DIR-3 with the company’s board resolution, or is allotted one through the incorporation form. A Class 3 digital signature is needed to sign it.
2. Consent and declarations. The appointee gives consent in Form DIR-2, a declaration of non-disqualification in Form DIR-8, and a disclosure of interest in other entities in Form MBP-1.
3. The appointing decision. The board may appoint an additional director if the articles allow, who holds office only until the next annual general meeting, where the shareholders regularise the appointment by ordinary resolution. Alternatively the shareholders appoint directly at a general meeting. The board can also fill a casual vacancy, and appoint an alternate for a director absent from India for three months or more.
4. Filing. Form DIR-12 with the Registrar within 30 days of the appointment, with the consent, the resolution and the letter of appointment attached. A change in designation at the AGM is a second DIR-12.
5. Registers. Enter the director in the register of directors and key managerial personnel, note the MBP-1 disclosures at the next board meeting, and update bank mandates and the GST registration, where the change of a director is a core-field amendment within 15 days.

Under section 168 a director resigns by written notice to the company. The resignation takes effect on the date the company receives the notice or the later date stated in it; the board’s acceptance is not required, though the board takes note of it and records it in its report to the next general meeting.

• The company files Form DIR-12 within 30 days of the resignation.
• The director may file Form DIR-11 with a copy of the resignation within 30 days, which is optional since 2018 but is the director’s own protection where the company does not file.
• The director remains liable for offences that occurred during their tenure.
• If all directors resign or the number falls below the minimum, the promoters or, failing them, the Central Government appoint directors until the shareholders do.

A resigning director should check that the MCA master data shows the cessation. A name left on the register keeps attracting notices, and liability for defaults after the date of resignation is far easier to resist with the filings in place.

Shareholders may remove a director before the end of their term by an ordinary resolution, after giving the director a reasonable opportunity to be heard. An independent director re-appointed for a second term needs a special resolution, and a director appointed by the Tribunal cannot be removed this way.

1. Shareholders holding at least 1 percent of the voting power, or shares on which ₹5 lakh has been paid up, give special notice of the resolution to the company at least 14 days before the meeting.
2. The company sends a copy to the director immediately. The director may make a written representation, which the company circulates to members, and may speak at the meeting.
3. The general meeting is called with 21 clear days’ notice and the resolution is passed by simple majority.
4. The company files DIR-12 within 30 days. The vacancy may be filled at the same meeting if special notice of that appointment was also given.

A director also vacates office automatically under section 167: on disqualification, on absence from all board meetings for twelve months, on failing to disclose an interest, or on conviction. Removal does not defeat a claim for compensation under the director’s contract, and a shareholders’ agreement may restrict removal, which is why the articles should match it; see our guide to the articles.

DIR-12 filed after 30 days attracts additional fees that rise with the delay, up to twelve times the normal fee. Until it is filed, the outgoing director remains on the public record and the incoming one cannot sign filings. Director KYC now runs on a three-year cycle with changes in personal details intimated within 30 days; see our DIR-3 KYC guide.

Our add or remove director service prepares the consents, resolutions and notices and files DIR-12, from ₹1,499.