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Director Change

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Director Change

Director change may fall on any of the below category of services. It is advisable to call our helpdesk before selecting the required services.

  • Appointment of director by the board
  • Appointment of director by shareholders
  • Resignation of director
  • Resignation and transfer of shares
  • Resignation and appointment of director (either by the board or shareholders)
  • Resignation, appointment of directors and transfer of shares (either to new director or existing shareholders)
  • Death of a director
  • Removal of a director

A director of a company can be appointed by the board if authorized by the articles of the company or by shareholders at the General Meeting. The new director need not be a shareholder in the company. However, in small companies, the management gives ownership in the company along with appointment of a director. The appointment of a director shall be as per the provisions of company and laws and regulations.

Similarly, if a director resigns from the company, and if he/she holds any shares in the company, he/she must transfer the shares to the new director or existing shareholders (who may be a director). Hence, selection of these services must be done very carefully as many of these services may fall into different categories. Answering the below questions helps you to select the correct services.

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Director Change

Before making a decision regarding the director change, identify your requirements and opt for the appropriate services. If you need any help, you can reach out to our helpdesk team any time.

  1. Whether the company is only appointing an existing shareholder as a director and there is no change in the ownership of the company? If the answer is yes, opt for either “Appointment of Director by Board” or “Appointment of Director by Shareholders”.
  2. Whether the new director appointed is not a shareholder without ownership? If the answer is yes, opt for either “Appointment of Director by Board” or “Appointment of Director by Shareholders”.
  3. Whether the new director appointed is not a shareholder and the company is planning to give ownership of shares? If the answer is yes, opt for “Appointment of Director and Transfer of Shares” (in case there is no new issue of shares) or issue of new shares.
  4. Whether a director is resigning and a new director is appointed? If answer is yes, then consider the below three cases: i. If outgoing director transfers shares to new director, then select - director appointment, resignation of director & transfer of ownership in the company ii. If outgoing director not transferring shares and incoming director is an existing shareholder, then select - director appointment (by board or shareholders) iii. If outgoing director transfer his shares to existing shareholders and new director is appointed without or with shareholding, then select - director appointment, transfer of share ownership and /or issue of shares.
  5. shares. Always look to helpdesk advise to decide opting service

DIN

Directors Identification Number or DIN is an identification number issued by the Ministry of Corporate Affairs (MCA), Government of India, to a director of a company. DIN is allotted to an individual and it is not company-specific. DIN is a permanent number to identify a person in the MCA system.

Is DIN mandatory for a Director?

It is mandatory for the proposed director to have a DIN allotted by the MCA.

How does one obtain a DIN?

DIN can be obtained by filing an online application with a copy of ID proof and address proof. Indian nationals must have a PAN for applying a DIN.

Who is an Additional Director?

Directors appointed by the board are called additional directors. The board can appoint additional directors if authorized by the articles of the company. Additional directors hold office until the next Annual General Meeting.

What is the qualification required for appointment as a director?

There is no specific qualification to become a director.

Does a director need to be a shareholder?

Generally, a director need not be a shareholder of a company. However, if the Articles of Association provides for qualification shares, the proposed director shall hold the said number of shares. Further, before appointing a person as director, he or she must have DIN allotted by the MCA.

Does a director take salary from the company?

A director can be employed as an employee in the company and can take salary as per company rules.

Who can appoint a director?

If the Articles of the Company permits, the board can appoint directors. Shareholders have the ultimate authority to appoint directors of a company. The Government of India also has the power to appoint directors in some cases.

Who can remove a director?

A majority vote by shareholders can remove a director from a company subject to compliance with procedures in the Companies Act.

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