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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.
The Board of Directors of a company is central to its decision making and governance process. Its liability to ensure compliance with the law underpins the corporate governance structure in a company, the aspirations of the promoters and the rights of stakeholders, all of which get articulated through the actions of the Board.
Law should provide for a minimum number of directors necessary for various classes of companies. The present prescribed requirement is considered adequate. However new kinds of companies will evolve to keep pace with emerging business requirements.
The ultimate responsibility to appoint/remove directors should be that of the Company (Shareholders). If the Directors themselves are legally disqualified to hold directorships, they should have equal responsibility for disclosing the fact and reasons for their disqualification. The government should not intervene in the process of appointment and removal of Directors in non-Government companies.
No age limit need be prescribed as per law. There should be adequate disclosure of age in the company’s documents. It should be the duty of the Director to disclose his age correctly. In case of a public company, the appointment of directors beyond a prescribed age say 70 years, should be subject to a special resolution by the shareholders which should also prescribe his term.