How to Appoint a New Director in Case of Demise of Company’s Director?

A director is one of the most senior executives in a company. He is responsible for the smooth running of the company. The business of a company can be brought to a standstill in case of the unfortunate demise of a director, especially if he was the sole director. However, once a new director gets appointed, the company can function smoothly once again. In this blog post, we will discuss how to appoint a new director in case of the company director’s unfortunate demise.

What Happens When a Director Passes Away?

When a director passes away, the same must be informed to the ROC through Form DIR-12. In place of the late director, a new director shall be appointed by the company’s board of directors. The appointment of the new director shall have to be approved by the shareholders of the company. 

The newly-appointed director will hold the office as if they’d been appointed the usual way. They’ll have all the rights, responsibilities and power of a director as per the employment contract. Such a director can ensure the company keeps running smoothly.

How to Appointment A New Director?

A new director will be appointed, after the previous director’s demise, by the board of directors based on the Articles of Association’s clauses and the general process for a new director’s appointment. 

Here is the general process for appointing a new director:

• Inform shareholders: Notify the directors of the director's passing.

• Select a new director: In the event of surviving shareholders, they may call a meeting and adopt a resolution designating a new director. More than half of the shareholders must agree on this.

• Find out who owns the shares: Find out the nominee or beneficiary who owned the deceased's shares.

• Issue fresh stock: If required, issue additional shares.

• Ownership transfer: Ownership of shares is transferred.

• Modify articles of incorporation: Modify the articles of incorporation like MoA and AoA of the business. 

Conclusion

A director is a mortal being just like any other human. It’s a sad truth that ultimately every human being’s life comes to an end. However, as they say, the show must go on. Hence, in the unfortunate event of a director’s demise, he must be replaced by a new director by the company. The position of a director cannot stay idle for too long since his role is extremely important for a company. 

To change or replace a director in your company, connect with Registrationwala for assistance. 

Frequently Asked Questions (FAQs)

Q1. Which form must be filed to inform the ROC about the director's demise?

A. To inform the Registrar of Companies (ROC) about the director's demise, Form DIR-12 must be filed.

Q2. Is it mandatory to appointment a new director after a company’s director passes away?

A. If a company is required to have 3 directors as a mandatory requirement, then if one of them passes away, a new director must be appointed. However, if there’s no such minimum director requirement, then the responsibilities of the late director can be split between the existing directors of the company.

Post updated on : 21-10-2024

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.