Changes in Private Limited Company
Deliverables - Timeline
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Deliverables
Form DIR 12
Form DIR 11
eForm SH-7
Form MGT 14
Timeline
2-3 months
(from receipt of all documents)
Changes in Director in Private Limited Company
Directors are generally appointed as per the applicable provisions of the Companies Act 2013, by the shareholders of the company to ensure that the day to day operations of the company are executed in an efficient manner. They have a fiduciary duty to the company and its shareholders, which means to say that they are responsible for conducting the affairs of the company in a way that ensures success and profitability and thus enhancing the image of the company and its reputation.
The change in the directorship of a company is possible at any time as and when needed. The change can be either voluntarily or through demand. The demand arises in case there is a requirement of an expert in the board or due to resignation or death of an existing director.
Addition of a Director
Board Meeting:
– Notice to be sent to the directors regarding the agenda of the meeting at least 7 days prior to their respective registered addresses.
– Pass a Board Resolution to call for a General Meeting where the appointment of the director can be made.
– Notice to be given to the shareholders regarding the particulars of the meeting, including the agenda, date, time and place of the meeting.
Annual General Meeting/Extraordinary General Meeting:
Once the Board Meeting has taken place, the person so appointed to circulate the notice regarding the General Meeting (“GM”), may issue to the notice to all of the following:
– Directors
– Shareholders
– Auditors
The notice of the GM has to be given not less than 21 days prior to the date on which the GM is to be held. However, a shorter notice period can be given if and only if the consent is given by not less than 95% of the members who are entitled to vote at the meeting. The consent has to be obtained either through:
a) Writing or b) Electronic mode
At the GM, the resolution will be passed subject to the approval of the shareholders.
Form DIR – 12 has to be submitted to the Registrar within 30 days from the appointment being made.
Prerequisites to be a Director:
– DIN – DSC
Resignation of a Director (Section 168 of the Companies Act 2013)
1. The resignation of a director may be considered by him giving the company a notice in writing regarding the reasons for such resignation.
2. The Board of Directors, on receipt of the notice given by the director, must present the same in the General Meeting to the shareholders so that they are informed of the same.
3. In the General Meeting, the fact regarding the resignation of the director must also be placed in the report of the directors laid before the shareholders.
4. The Company must also file Form DIR – 12 with the Registrar within 30 days of the date of resignation.
5. The effective date of resignation here will be the latest of:
– The date on which the notice is received by the company.
– The date specified in the notice.
6. The director will submit Form DIR – 11 along with the prescribed fees including a copy of his notice of resignation and the detailed reasons for the same to the Registrar of Companies (“RoC”) in less than 30 days from the date of resignation.
Removal of a Director (Section 169 of the Companies Act 2013)
Removal only happens before the expiry of the director’s term. This can be made possible by passing an ordinary resolution at the General Meeting of the shareholders, but only after giving the director a reasonable opportunity of being heard.
a) Notice of the resolution
– A notice of the resolution for the removal of the director will be circulated to all the necessary persons at least 7 days prior to the meeting.
– Where the notice cannot be delivered due to unavoidable circumstances:-
1. It can be published in the newspapers. (One in English and the other one in the regional language)
2. The notice must be posted on the company’s website.
– Once this notice is received, the company shall send a copy to the concerned director.
– He will be entitled to be heard at the General Meeting where the resolution is to be passed.
b) Written Representation
– A representation against his removal may be made in writing by the director.
– He may further request that the representation be circulated to all the members.
– A notice regarding the same will have to be issued to the members.
– Where circulation is not possible, he may request it to be read at the meeting.
C) Filing with the ROC
Form DIR – 12 has to be filed with the Registrar within 30 days from the date of resignation of the director along with the prescribed fees and the necessary attachments.
Form DIR – 12
This form has to be filed with the particulars of appointment of directors and key managerial personnel and the changes among them. The details mentioned below have to be entered in:
– Details of the company.
– Details regarding the number of directors, managers etc.
– The date of cessation or the date of appointment, as the case may be.
– Respective DINs and DSCs to be affixed wherever necessary.
Attachments:
Declaration of the director to be appointed.
In case of removal/resignation-
Notice of resignation.
Evidence of cessation.
Any other optional attachments.
Form DIR – 11
This form is to be filled for the purpose of giving notice of resignation of the director to the Registrar. The following details have to be entered in:
1. Details of the company.
2. DIN of the resigning director.
3. Date of filing the resignation with the company.
4. Reasons for the resignation.
5. Attachments:
6. Notice of resignation filed with the company.
7. Proof of dispatch.
8. Acknowledgement received from the company if any.
9. Any other optional attachments.
10. Although the company goes on, credit to the perpetual succession and separate legal entity features, it has to abide by the provisions of the Companies Act, 2013, and the specified rules by filing the relevant forms within the stipulated time with the relevant authorities.
Change Authorised Capital of Company
When a company is in its incorporation stages, one of the most important decisions that have to be made by the promoters is the amount of capital to invest in the company.
As the business begins to pick up, the company may look to expand its operations, expand in size, scale or structure. To make that dream a reality, it may require the pumping in of more funds into the company, basically increasing the share capital of the company. Sometimes, the amount of capital required might surpass the limit of the authorised capital at the time. The authorised capital is the maximum amount of capital for which the Company can issue shares to the shareholders.
As per Section 2(8) of the Companies Act, 2013, the Authorised Capital limit is specified in the Memorandum of Association under the Capital Clause. A company may take the necessary steps required to increase the authorised capital limit in order to issue more shares, but it cannot issue shares exceeding the authorised capital limit in any case.
Procedure to Change the Authorised Capital
The Articles of Association is the document that contains the rules and regulations regarding the internal working of the company. So, before any action can be taken regarding the increase/reduction in the authorised capital, the Articles of Association must be verified to check whether a provision exists that allows for a change in the authorised capital of the company.
If the provision exists, then the process becomes simplified. However, if the provision does not exist, then the Articles of Association must be amended first as set out under Section 14 of the Companies Act, 2013 (“Act”), and then only can the company proceed with the alteration of authorised capital.
If the provision exists, then the process becomes simplified. However, if the provision does not exist, then the Articles of Association must be amended first as set out under Section 14 of the Companies Act, 2013 (“Act”), and then only can the company proceed with the alteration of authorised capital.
Board Meeting to be conducted
Notice to be sent to the directors regarding the agenda of the meeting at least 7 days prior to their respective registered addresses.
At the Board Meeting, pass a Board Resolution to call for an Extraordinary General Meeting and issue notice pursuant to the provision of Section 101 of the Act, where the altered clause on authorised capital in the Memorandum of Association can be presented for approval by passing an Ordinary Resolution. The proposed amendment shall be in accordance with the provisions as set out under Section 60 of the Act.
Notice to be given to the shareholders regarding the particulars of the meeting, including the agenda, date, time and place of the meeting.
The notice must specify the method of voting to be adopted for the passing of the resolution at the Extraordinary General Meeting.
Notice of the Extraordinary General Meeting is to be issued to all of the following:-
1. Directors
2. Shareholders
3. Auditors
The notice of the EGM has to be given not less than 21 days prior to the date on which the EGM is to be held. However, a shorter notice period can be given if and only if the consent is given by not less than 95% of the members who are entitled to vote at the meeting. The consent has to be obtained either through:
Writing
Electronic mode
Holding the Extraordinary General Meeting
Once the meeting is in session, the matter of the increase in the share capital is presented forth. Voting then takes place in a predetermined manner to come to a conclusion regarding the matter. Once the approval has been obtained, and the resolution is passed, the explanatory statement to the same is attached, and the increase in the Authorised Capital is made.
Filing with the Registrar of Companies
In less than 30 days of the resolution being passed, a company must file eForm SH-7 and eForm MGT – 14 (if applicable) along with the prescribed fees with the Registrar.
1. Form MGT – 14:
This form has to be filed with the RoC first within 30 days of passing the respective resolution. The form is to be filed on the MCA portal, with the following details:
1. Details of the company, including its CIN.
2. Purpose concerning which the form is being filed.
3. Date of dispatch of the notice.
4. Date of passing the resolution.
5. Details regarding the resolution.
6. Digital Signatures and DINs wherever necessary.
The following attachments are to be provided:
1. Notice of the EGM along with the Explanatory Statement as per Section 102.
2. Certified copy of the resolution passed in the EGM.
3. Copy of the new MOA (change made in the Capital Clause).
4. Copy of the new AOA (provision for the increase in authorised share capital).
2. Form SH – 7:
This form has to be filed with the RoC within 30 days of passing the respective resolution. The objective of this form is to intimate the Registrar regarding the details of the increase in the authorised capital. The form is be filed on the MCA portal, with the following details:
1. Details of the company, including its CIN.
2. Type of resolution.
3. Date of the meeting.
4. Service Request Number (SRN) of Form MGT – 14 already filed.
5. Details regarding amount of original authorised share capital and amount of new authorised share capital.
6. Details regarding the breakup of the additional share capital.
7. Particulars regarding the Stamp Duty Fees paid.
8. Digital Signatures and DINs wherever necessary.
The following attachments are to be provided:
1. A certified true copy of the resolution for the alteration of capital.
2. Copy of the new MOA (change made in the Capital Clause).
3. Copy of the new AOA (in case of alteration to include provision for the increase in authorised share capital).
4. Any other optional attachment, if any. The forms must be submitted within the time period stipulated in order to avoid any penalties or subsequent punishment wherein the company as well its officers will be held liable.
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