Unlock New Strategies for Changing Directors in India: What You Need to Know

India is one of the world’s fastest-growing economies, with a dynamic corporate sector governed by the Companies Act, 2013. This legislation provides the legal framework for corporate governance, outlining the responsibilities of directors, compliance requirements, and procedures for conducting Annual General Meetings (AGMs). Ensuring adherence to these regulations is crucial for companies looking to maintain transparency, accountability, and sustainable business growth.

Why Do Companies Shake Up Their Leadership?

Director changes in India aren’t just about compliance—they’re about power moves, fresh perspectives, and business evolution. Companies switch directors to bring in new expertise, drive efficiency, and meet regulatory demands. The Companies Act, 2013, ensures these transitions follow the law, but execution requires strategy and precision.

Who Can Take the Helm? Understanding Director Eligibility

Under Section 149(1), a private limited company must have at least two directors, and one must be a resident director who has spent at least 182 days in India in the previous calendar year (Section 149(3)). Public companies in India have extra rules, requiring independent directors and at least one woman director (Section 149(4)).

Not everyone can wear the director’s hat! Section 164 disqualifies individuals who are:

Declared of unsound mind by a court.
Insolvent or facing insolvency proceedings.
Convicted of a crime with imprisonment.
Disqualified by a court or Tribunal order.
Guilty of non-compliance with financial filings for three consecutive years.

The Playbook for Appointing a New Director in India

Check Your AOA: Ensure your Articles of Association (AOA) allow new appointments. Amend if necessary.
Get Board & Shareholder Approval: Pass a resolution at an AGM or EGM.
Secure DIN & DSC: Every new director needs a Director Identification Number (DIN) and Digital Signature Certificate (DSC) (Section 152(3)).
Formalize the Appointment: The director submits Form DIR-2 (Consent to Act) and receives an official appointment letter.
Register with the ROC: File Form DIR-12 within 30 days (Section 170).
Update Your Records: Keep your Register of Directors and compliance filings current.

The Right Way to Exit: Director Resignation & Removal in India

A director looking to resign in India? They must submit a written notice, acknowledged in a Board Meeting, and the company must file Form DIR-12 with the ROC within 30 days. To safeguard their own interests, the resigning director should also file Form DIR-11 independently.

Removing a director in India? Shareholders must pass a special resolution at an EGM after issuing a special notice (Section 115). Once the decision is made, the company files Form DIR-12 with the ROC and updates its records.

Want to simplify AGM management?

Klea offers tailored solutions to streamline compliance and empower your business. Book a demo today and unlock smarter corporate governance. For more insights into processes in other jurisdictions, explore our article, Saudi AGM Compliance Made Easy: Strategies You Need to Achieve Governance Success and Triumph.