How to Inform MCA/ROC in Case Of the Death of the Director?

MCA or the Ministry of Corporate Affairs deals with the Companies Act 1956, Limited Liability Partnership Act 2008, and other regulations and acts associated with the functioning and administration of the corporate sector. ROC (Registrar of Companies) is an office or a branch of MCA and is responsible for registering companies and LLPs and ensuring that those companies and LLPs comply with the legal requirements under the Act.

The MCA/ROC works for empowering the business and protecting the investors. The Board of Directors is appointed that has to work out for strategic oversight over business operations accompanied with compliance with the legal framework, integrity of monetary accounting, etc. The appointed directors are responsible for the prosperity of the corporation and Section 149 of the Companies Act, 2013 provides that every company shall have an individual Board of Directors as directors. Chapter XI of the Companies Act, 2013 provides more information on the appointment of directors and their qualification requirements. It is essential to know the procedure for the appointment of a new director in case of a casual vacancy or death of the existing director.

Death of the Director

According to the new Companies Act, 2013, Form DIR-12 must be submitted in the event of resignation, termination, or death of the director with concerned ROC. Once DIR-12 is filled, DIR-11 needs to be filled to inform the ROC for cancellation in a particular company.

Forms to be submitted in the event of a director’s appointment if there is a casual vacancy

• Form DIR-12: Regarding the director who was in charge of his office within 30 days of such an event.
• Form DIR-12: Regarding to the director appointed for the office of such deceased director within 30 days of such appointment.

A single form in regards to both can be filed if such appointment and ending are done within the same 30 days.

The appointment of directors is regulated by the law since they play a very crucial role in the development and accomplishment of the corporation.

Appointment of the new Director

• In the general vacancy is caused by the death of a director in public or private companies, Section 161 (4) of the Companies Act, 2013 comes into play according to which the vacancy must be filled by the convoking of meeting by the Board of Directors.
• Thus, the director appointed to fill this vacancy must hold the post to the extent that a director appointed in his or her office would have held if no one had left. Such appointment although is subject to the provisions of Articles of Association which define the company’s purpose and regulations for its operation.

The private companies subsidiaries to a public company. However, after the amendment in 2017, all companies including a private company may fill up the casual vacancy by the board and the casual vacancy filled by the Board shall be subsequently approved in the immediate next general meeting.

The term of the new Director appointed in place of incumbent will hold office in charge for the remainder of the tenure of the deceased Director. In addition, a newly appointed Director is not eligible for re-appointment as a Director.

There is an important question that arises as to how a company may comply with the quorum requirements at a board meeting to appoint a new director as the number of directors is below the legal limit. The relevant provision for the same is section 174 of the Act.

Some requisites for the filling of casual vacancy in such office of the director

• The power to appoint a Director when there is a casual vacancy may be exercised by the Board of Directors only by passing a resolution to the general meeting of the Board.
• A person who is nominated for appointment as a Director to fill a vacancy in case of a casual vacancy is not liable for any disqualifications referred to in Section 164 and 165 of the Act.
• Section 149 (6) and Rule 5 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 is set out if such casual vacancy in question relates to an Independent Director. The nominee is appointed as a Director in the ordinary post and fulfills the conditions, in respect of an Independent Director.

Conclusion

The article highlights the information regarding the death of a director leaving a casual vacancy behind. In such a case, the appointment of a new director is done through a specified procedure. As the director dies, he ceases to hold the position of the director of all the companies he was holding directorship with. The Board of Directors in the meeting after such event takes into account the note and contribution of such deceased director. A new director is then appointed in the meeting of the Board of Directors for the remaining tenure of such casual vacancy.