REMOVAL AND ADDITION OF DIRECTORS AND PARTNERS

Removal of Director- A director of the company performs a significant role. He/she is responsible for performing and managing the company’s policy. There are various critical services that directors are assumed to look after. If the director of the company isn’t actively engaging in the company’s operation and working, then the director is certainly not helpful. As a conclusion, a company can remove him/her.

Removal of Partner- A Limited Liability Partnership is run by its partners. From its management to the operation, the partners direct the LLP towards its goals and vision. New partners are added or existing leave; it does not affect the status of the LLP. To add or remove a partner from LLP, the consent of other partners must be obtained, which is followed by a change in the LLP Agreement and application to MCA to approve the changes.
A Partner in a LLP cannot be removed by a majority of the other Partner unless the LLP agreement expressly provides such powers. If the LLP Agreement provides such power, a Partner can be removed.

Addition of Director- Director of a company is a person elected by the shareholders for managing the affairs of the company as per the Memorandum of Association and Articles of Association of the company. Since a company is an artificial judicial person created by law, it can only act through the agency of natural persons. Thus, only living persons can be Directors of a company and the management of a company is entrusted to the Board of Directors.
For appointing an additional director, the articles of association must contain a provision authorizing the board of directors to appoint an additional director. A director cannot be appointed as an additional director if his resolution proposing him as a director was not passed by the shareholders in earlier general meeting.

Addition of Partner- When firm requires additional capital or managerial help or both for the expansion of its business a new partner may be admitted to supplement its existing resources. A new partner can be admitted into the firm only with the consent of all the existing partners unless otherwise agreed upon. With the admission of a new partner, the firm is reconstituted and a new agreement is entered into to carry on the business of the firm

Types of Directors:-

• 1. Women Director
• 2. Resident Director
• 3. Additional Directors
• 4. Independent Director
• 5. Alternate Directors
• 6. Nominee Director

Disqualifications of Director- Under company law, a director can be disqualified for any of the following reason:
1. He is of an unsound mind and is declared so by the court.
2. He is insolvent.
3. He is in the process of declaring insolvency and his application is pending.
4. He has been convicted by a court of any offence (whether or not involving moral turpitude) and has been imprisoned for at least six months. However, if a person has been convicted of any offence and has served a period of seven years or more, he shall not be eligible to be appointed as a director in any company.
5. If an order has been passed disqualifying him of being appointed as a director by a court or Tribunal.
6. He has not paid any calls with respect to any shares of the company held by him, whether alone or jointly with others, and a period of six months has elapsed from the last day fixed for the payment of the call.
7. He has been convicted of offences dealing with related party transactions at any time during the last preceding five years.
8. He has failed to acquire a Director Identification Number.

Ways to Remove a Director- Following are the possible ways for removal of a director:-
1. Where the Director himself gives his resignation
2. To remove a Director Suo-moto by the Board
3. In case the Director does not attend three Board Meetings consecutively

Procedure to Remove a Director when he himself gives resignation:-

1. The company will hold a Board Meeting by giving seven days of clear notice

2. When the Board meets, they will discuss amongst themselves and decide whether to accept the resignation or not.

3. Once the Board accepts the resignation of the director they will pass a Board resolution accepting the resignation

4. After the passing of the resolution, form DIR – 11 has to be filed by the outgoing director along.

5. While the filing of DIR – 11 is the responsibility of the director, form DIR – 12 is the responsibility of the company which has to be filed with the Registrar of Companies.

6. After filing all the forms, the name of the director will be removed from the master data of the Company on the Ministry of Corporate Affairs website.

Procedure to Remove a Director Suo moto by the board:-

1. A Board Meeting will be called by giving seven days’ notice to all the directors informing them about the removal of the director.

2. Resolution for the holding of an extraordinary general meeting will be passed along with the resolution for the removal of the director subject to the approval of the shareholders.

3. A general meeting will be held by giving 21 days clear notice.

4. Before the passing of the Special resolution, an opportunity of being heard will be given to the director.

5. Forms DIR – 11 and DIR – 12 will be filed with the Registrar of Companies

6. After the filing of the forms, the name of the director will be struck off from the Ministry of Corporate Affairs website.

Procedure to Remove a Director in case he does not attend three Board Meetings consecutively- If a Director does not attend a Board Meeting for 12 months, starting from the day on which he was absent at the first board meeting even after giving due notice for all the meetings, it will be deemed that he has vacated the office and a Form DIR – 12 will be filed on his name and his name will be removed from the Ministry of Corporate Affairs.

Procedure to Remove a Partner:- To effect a resignation or removal or cessation of Partner from LLP, LLP Form 4 must be filed within 30 days of removal or resignation or cessation of Partner.

Procedure to Appoint a Director:-

1) The first step is to obtain a Digital Signature Certificate (DSC) by all the Directors. Documents required to obtain DSC are:

• PAN Card of the Director
• Aadhar card of the Director
• Photo
• Email ID
• Contact Number

2) After obtaining DSC, the next step is to obtain the Director Identification Number (DIN) by filing form DIR-3 along with a self-attested identity proof, address proof and a photo. (If directors are more than three as DIN for up to three directors can be obtained through Spice+ Inc-32).

3) Board Meeting for Approval of Proposal of Appointment- Board meeting shall be convened to approve the proposal of appointment. In the meeting, required resolutions to be passed for appointment of proposed Director as an Additional Director of the Company.

4) Consent & Declaration from proposed Director- Before the appointment, the Board shall obtain a Consent in Form DIR-2 and a Declaration in DIR-8 from the proposed Director.

5) Filing of Returns with ROC- After the Board meeting, a Return of Appointment of Directorship (Form DIR-12) is required to be filed with Registrar within 30 days of appointment along with required attachments . In case of Companies other than OPC and Small Company, the return is also to be certified by a Company Secretary/Chartered Accountant/Cost Accountant. The details of new director shall be update with MCA portal against respective Company.

Procedure to Appoint a Partner:-

1) The first step is to obtain a Digital Signature Certificate (DSC) by the Partner . Documents required to obtain DSC are:

• PAN Card of the Director
• Aadhar card of the Director
• Photo
• Email ID
• Contact Number

2) After obtaining DSC, the next step is to obtain the Designated Partner Identification Number (DPIN) by filing form DIR-3 along with a self-attested identity proof, address proof and a photo.

3) Pass resolution for admission of Partner- Existing Partners shall pass written resolution after conducting meeting with partner. This Resolution for admission of Partner authorized existing partner to act on half of LLP & Partner’s. Existing partner who is authorized for legal formalities shall hold a valid DSC and DIN Number.

4) Execute Amendment to LLP Agreement- LLP carries businesses as per terms and conditions of agreement. This is source document which have information of Capital , Profit & loss sharing ration, Role & Responsibilities of Partners etc. The supplement LLP Deed Agreement shall be executed by existing partner and new partner. This agreement may have information about New partner capital introduced , roles, duties etc.

5) File Form 4 & Form 3 intimating Change of Partner in LLP- Form 4 of LLP shall be filed online to Ministry of Corporate Affairs for intimation of Change in Partner of LLP. Form 4 is towards Notice of appointment, cessation, change in name/ address/ designation of a designated partner or partner. and consent to become a partner/designated partner/ Notice of appointment, cessation, change in name/ address/ designation. Form 3 of LLP shall be filed online for uploading supplementary LLP Agreement.

Documents required for Removal of Director:-

1. Board Resolution passed for accepting the resignation.

2. Copy of Resignation Letter

3. DSC of the resigning director and continuing director

Documents required for Addition of Director:-

1. Board Resolution approving the appointment of director

2. Consent to Act as Director

3. Declaration by Director that he/ she is not disqualified to be appointed.

4. Letter of Appointment

5. DSC of New and Old Director

Documents required for Removal of Partner:-

1. DSC of the continuing partner and partner to be removed

2. Existing LLP agreement

3. New supplementary LLP Agreement

4. Certificate from designated professionals to certify that the books and records of the LLP have been found to be true and correct.

Documents required for Addition of Partner:-

1. Passport size photograph of the partner to be appointed

2. Self-attested PAN card of the partner to be appointed

3. Proof of Residence (Aadhar Card/ Voter ID/ Passport/ Driving License) partner to be appointed

4. DSC of the old and new partner

5. Existing LLP agreement

6. New supplementary LLP Agreement

7. Personal E-mail Id and Phone Number of partner to be appointed.

8. Consent to act as partner/ designated partner