Private Limited Company

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Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2011 A family run private limited company has two directors both of whom are the "first directors".

One of them wishes to:
(a) leave the directorship, and
(b) give up the shareholding.

How can this be accomplished?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)

29 May 2011 1st of all appoint someone else as a director. Thereafter the director wishing to leave can resign and his shareholding can be acquired by the new director.

Form 32 needs to be filed 1st for appointment and then for resignation.

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Tareq Imam

Tareq Imam (Expert)

29 May 2011 resigning and joining can be done on the same day. then only one form 32 will be required

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Jayashree S Iyer

Jayashree S Iyer (Expert)

30 May 2011 Anwers to your query:

1) Leaving the directorship - The director can submit his resignation to the Board of Directors. It takes effect immediately. However a new director need to be inducted immediately as a minimum of 2 directors is required for a private company as per Section 252(2) of the Companies Act, 1956.

2) Giving up shareholding - Check the Articles of Association for restrictive provisions, if any. Otherwise he can transfer his shares to anyone.

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CA. Krishna K Neeraj

CA. Krishna K Neeraj (Expert)

30 May 2011 1) In Pvt Ltd Company, minimum two directors are required. Therefore, before resignation of one of two directors, another person should be appointed as director. For Resignation, The director is required to submit his resignation to BOD of the company. After resignation, Company is required to intimate ROC about change in directors in form 32.

2) For transfer of shares, he is required to fill transfer deed (duly stamped) and should adopt share transfer formalities.

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Querist : Anonymous

Querist : Anonymous (Querist)

02 June 2011 Thanks very much M/S Sanjay Gupta, Tareq Imam, Jayshree Iyer & Krishna Neeraj for your responses.

I am told that a "first director" cannot resign the position. Is this true? I would appreciate clarifications.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)

05 June 2011 No its not true.

The Articles may provide that the first directors appointed by the Articles shall continue to hold office until their office become vacant by resignation, removal, death or otherwise, or they are superseded by appointing other directors in accordance with the provisions of the Articles.

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