How to Appoint or Remove a Director in a Private Limited Company?

A Director in a Private Limited Company plays a vital role in shaping business decisions & driving long term growth. It ensures compliance & supports smooth business operations. The company may add expertise to the board or change leadership due to operational or compliance reasons. 

Today, In this Article we will Look at the Director in a Private Limited Company on filesure.

What is the Role of a Director in a Private Limited Company?

A Director in a Private Limited Company manages company affairs & ensures legal compliance & protects stakeholder interests & guides business direction. These individuals act as fiduciaries & work in the best interest of the company.

Key responsibilities of a director include:

• The planning of business strategy & decision making.

• The compliance with Companies Act 2013.

• The monitoring of financial performance.

• The representation of the company before authorities.

• The protection of shareholder interests.

These responsibilities require that both appointment & removal of directors follow a structured legal process.

What is Eligibility Criteria for Director Appointment?

Before learning how to appoint a director in a private company it is important to check eligibility conditions.

Basic eligibility requirements:

• The individual must be at least 18 years old.

• They must not be disqualified under Section 164 of Companies Act 2013.

• They should hold a valid Director Identification Number DIN.

• They must submit written consent to act as a director.

Common disqualifications include:

• The condition of insolvency or being declared bankrupt.

• The conviction by a court involving moral misconduct.

• The non filing of financial statements or annual returns by companies where the person served as director.

These eligibility criteria for director appointment must be fulfilled before starting the appointment process.

How to Appoint a Director in a Private Limited Company?

The appointment of Director in a Private Limited Company may happen for multiple business reasons. These include business growth & skill addition & legal requirements or replacement of an outgoing director.

• The formation of a new company.

• The appointment of an additional director.

• The filling of a casual vacancy.

• The appointment of a managing or whole time director.

What is the procedure for Appointment of a Director?

The procedure for appointment of Director requires internal approvals & statutory filings within set timelines.

Step by step overview:

• They identify a suitable candidate who meets legal eligibility.

• They obtain DIN & DSC if not available.

• They collect written consent from the proposed director.

• They pass the board resolution for appointment of director.

• They obtain shareholders approval for director appointment when required.

• They complete MCA filing for director appointment.

This approach ensures transparency & legal compliance.

Appointment vs Removal of Director

Common Compliance Mistakes to Avoid

• The delay in DIR 12 filing procedure.

• The ignoring of Articles of Association.

• The failure to record board or shareholder resolutions.

• The appointment of disqualified individuals.

• The improper notice during removal.

These mistakes should be avoided to maintain proper governance.

Conclusion

A Director in a Private Limited Company remains a core element of strong corporate governance & legal stability. The change in directorship must follow proper legal steps & compliance discipline. The procedure for appointment of Director & the Director removal procedure under Companies Act 2013 must be followed accurately.

Also Read : Why Investors Prefer Companies That File Regularly with MCA