APPOINTMENT AND REMOVAL

OF DIRECTORS

Submitted To:
Ms. Kanika
Arora

Presentation By:
Gagandeep Singh
Garima Verma

INTRODUCTION
The administration of the company is in the hands of the directors. They take
decision on policy matters. They are not paid servants. They serve in three
different ways:
As a Trustee
As an Agent
As a Partner

WHY
Directors?

MEANING
1. There is no statutory definition of a company director
although Section 149(1) of the Companies Act, 2013 does
provide that every company shall have a Board Of Directors
consisting of individual as Directors.
2. Director includes any person occupying the position of
director, by whatever name called. Thus, instead of name,
designation or the title, definition of director is based purely
on position occupied by him and functions he performs.

QUALIFICATION
1. No educational or other qualifications are required in
order to become director of the company whether public
or private.
2. Similarly, the Companies act 2013 does not prescribe
any requirement as to age limit for becoming a director.
3. The only condition is that No body corporate, firms or
associates can become a director.
4. Only Individual can be a Director of a company because
the office of a director is office of responsibility,
accountability and position of trust.

NUMBER OF DIRECTORS
1. As per section 149 (1) every public company shall have 3
directors and every other company shall have at least 2
directors.
2. Maximum no. of directors in case of private company shall
be as specified by the articles. It could be 15.
3. The act does not prescribe any maximum number of
directors for public company also but if the maximum no of
directors exceed 12, prior approval of central Govt. would
be required.
4. Thus the approval of central govt will be necessary for the
increase in number of directors and not for the
appointment .

Appointment Of Director

APPOINTMENT BY PROMOTERS
1. Person named in the articles of association as directors
become the first director of the company or
2. In the absence of the provision in the articles regarding
persons to be appointed first directors, the subscribers to the
memorandum of association will become the first directors.
3. First directors are to hold office till directors are duly
appointed in general meeting.

APPOINTMENT BY ELECTION
According to Section 152,
1. The members at the general meeting of the company will elect
the directors.
2. This is the most common and usual mode of appointing
directors.
3. The Section further provides that every director would obtain
Director Identification Number from the Central Government
before he/she acts as a director in any company.

APPOINTMENT BY NOMINATION BY
BOARD OF DIRECTORS
1. The Board of Directors will fill up the casual vacancy arising
among the directors by nomination.
2. Directors so appointed will remain in the office only for the
unexpired period for which the director whose post is empty,
would have remained in the office.
3. Board has powers to appoint additional directors, casual
directors as per the provisions of Section 161, provided
authorized by the Articles of Association

APPOINTMENT BY CENTRAL
GOVERNMENT
1. The central government has the power under section 242
to appoint directors on an order passed by the tribunal
(earlier company law board) to effectively safeguard the
interest of the company or its shareholders or the public
interest to prevent mismanagement.
2. Such directors shall hold office for a period not exceeding
three years on any one occasion.

APPOINTMENT BY THIRD PARTIES

1. Section 255 permits that one third of the total number of
directors of a public company or a private company which is
subsidiary of a public company to be appointed by parties
other than share holders on a non-rotational basis.
2. The articles may give right to debenture holders , financial
corporations or banking companies who have advanced loans
to the company to nominate directors on the board of
company.
3. The number of directors so nominated should not exceed
one third of the total strength of the board.

DISQUALIFICATION OF
DIRECTORS
According to Section 149(1) of the companies Act,
2013, only individual can be appointed as the director.
However a person shall not be capable of being
appointed as director of the company, if
Unsound Mind
Convicted by a Court

REMOVAL OF DIRECTORS

The shareholders, the Central Government or

the court may remove the directors. The rules
regarding the removal of the directors are as
follows:

REMOVAL-BY SHAREHOLDERS

A company may by ordinary

resolution remove a director before
the expiry of period of office except
in the following cases:

DIRECTORS WHO CANNOT BE

REMOVED
1. An director appointed by the central Government under IDRA Act, 1951 in case
of mismanagement and oppression cannot be removed.
2. In a private company a director appointed for life and holding office as such on
1st April 1952 cannot be removed by members resolution.
3. Where the articles of a company provide for the election of directors by
proportional representation, a director elected by that method cannot be removed
by the resolution.

SPECIAL NOTICE FOR REMOVAL OF

DIRECTORS
Special notice must be give of the resolution to remove a director, copy
of which must be give to the director concerned. The meeting which
removes a director can elect another in his place if the director was
originally appointed by the election.

REMOVAL BY THE CENTRAL

GOVERNMENT
The central Government shall by order remove from the
office any directors against whom there is a decision of the
High Court, holding that he is not a fit or proper person to
hold the office of director.