CHANGE IN DIRECTOR

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Change in Director and Designated Partner

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Change in any business is an inevitable factor. It must be done because many a times the change is necessary so that the business can grow and develop. The changes are the modern on which the foundation of any business stands. It is one of those things that employees always hate. The resistance to change is human behaviour and it is not something that can be changed or controlled but what can be done is to avoid the haphazard in which the organizational changes occur in the business. The changes that are to be introduced in the business must be gradually and slowly, no organization should commit the folly of bombarding the organization with the changes because it always affects the employee’s morale and incentive to work.

But sometimes organization has to bring major changes in its working which are some of the most difficult to do with. Thus, we see that organization are keen on doing changes but they must also keep in mind the fact that changes must be done gradually and slowly and specially not in a haphazard manner.

And also, before taking forward any changes, the board of directors (BOD) should keep in mind whether the particular change being made into the organization would have positive effect on the negative effect on the employees’ morale and confidence. They must also think over the fact that whether it is necessary to do so or not, and how the business environment of the organization would be affected.

One such major change is that of the change in the directors of the company. This is a major change because of the fact that board of directors represent the values, visions and objective among other things for which the company stands for. Changing the board of directors is a mammoth change because of the fact that a simple change in the board of directors represents the changes on all the above things that we have just listed down. There are numerous circumstances under which the company might need to change its board of directors such as, due to death, due to incompetency or mutual consent of the owners of the company.

Directors are appointed by the shareholders of a Company for the management of a Company. As per Companies Law of 1956, a Private Limited Company is required to have a minimum of two Directors and a Limited Company is required to have a minimum of three Directors. On the other hand, a Limited Liability Partnership (LLP) has Designated Partners and Limited Liability Partnership Act, 2008 requires each LLP to have a minimum of two Designated Partners. Appointment or removal of a Director or Designated Partners maybe required due to various reasons.
To add a director or remove a director, first of all, directors' Digital Signatures (DSC) is obtained and then Director' Identification Number (DIN) is allotted to them which is mandatory to be a director in India. Shareholders in general meeting can do the removal of Director bypassing the ordinary resolution and can also be removed before the completion of their term after giving a reasonable opportunity of being heard.