Removal of a Director

A director can be removed only if he reaches any of the disqualification criteria specified in the Companies Act, 2013. The stockholders can remove a director before the end of his tenure, except appointment by the Central Government. Post the removal; the company should file DIR-12 with the Registrar of Companies.

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Removal Of A Director

Overview on Remove a director

There should at least contain 2 directors for the private limited company and 3 directors for the public limited company in India.  It’s a big issue for a company to remove a director and essential steps need to be taken regarding that. 

By issuing an ordinary resolution, a company can withdraw a Director from his post. Unless and until the director has not been elected by the Central government or a Tribunal. A board meeting needs to be announced by giving seven days’ notice to all the directors.

 Possible case to remove a director is:

      • If they incur any of the disqualifications specified under the Companies Act
      • If they absent themselves from board meetings over 12 months
      • If they enter into contracts or arrangements against the provisions of Section 184 of the Companies Act
      • If they are disqualified by an order of a court or tribunal
      • If they are convicted by a court of any offence and sentenced to imprisonment for not less than six months
      • If they have not abided by the terms and protocols mentioned in the Companies Act of 2013
      • If they have resigned voluntarily from their position.

Requirements for remove a director

    • Select new director on board
    • Select operational capacity without dilution ownership. 
    • Director’s insufficiency in work. 
    • The number of directors doesn’t fit under the legal limit. 

When the Director gives his resignation -

A Director can submit his resignation to the board. While considering his proposal, the board takes the following steps:

    • The company shall conduct a Board Meeting by granting seven days of clear notice, which means 7 days notice excluding the day on which the notice was presented and accepted.
    • In that board meeting, the Board members will discuss with each and decide whether to accept the resignation or not.

If the withdrawal is been accepted, they will additionally pass a Board Resolution allowing the resignation in the below format:

    • “RESOLVED THAT the resignation of Mr XYZ be and is hereby accepted with direct effect“. 
    • “FURTHER RESOLVED THAT the Board expresses its gratitude to MR. XYZ for his support and leadership throughout his term as a Director of the Company”
    • “RESOLVED FURTHER THAT the company’s directors be and are hereby jointly empowered to perform all actions, deeds, and things necessary to the aforesaid person’s resignation from the directorship of the Company.”
    • After the resolution has been given, Form DIR-11 needs to be recorded by the outgoing director along with the Board Resolution and proof of the resignation letter and its distribution.
    • While the filing of Form DIR-12 is the responsibility of the company, Form DIR-11 is the responsibility of the outgoing director. He needs to file it along with the resolution of the board.
    • While the filing of Form DIR-12 is the responsibility of the company, Form DIR-11 is the responsibility of the outgoing director. He needs to file it along with the resolution of the board.

To remove a director by the board according to Section 169 of the Companies Act 2013, shareholders have the power to remove the director by giving an ordinary resolution in a general meeting, except in the case the Central Government or the Tribunal did not designate the Director.

REMOVAL OF DIRECTORS BY SHAREHOLDERS

A director is dismissed either by shareholders of the company or by the Central Government or by the Court. Order for removal of the Director of a company which states to the Companies Act 1956 is here:

The company can remove a director at any time by placing an ordinary resolution, As per Sec.284 of the Companies Act 1956.

The removal or approval of a director in the place of a removed director needs a resolution requiring proper notice. Therefore, the proposer has to assign a notice to the company within 14 days before the meeting and the company ought to give the recommended resolution to the concerned director and the members. The director has a right to make representations and to converse at that general meeting. He shall also inquire that these representations be reported to the members of the company. Under such conditions, the company shall:

    • State the fact of the representations holding been made in any notice of the resolution presented to the members of the company; and
    • Deliver a copy of the illustrations to every member of the company to whom notice of the meeting is granted (whether before or after receipt of the representations by the company).

If a copy of the representations is not given as aforesaid because they are taken too late or because of the company’s default, the director may expect that the representations shall be viewed out at the meeting.

 

The removed director may get compensation or damages for the termination of his employment. If the vacancy is not chosen at the same meeting, the Board may appoint it as if it is a casual vacancy. But once a director is removed he cannot be appointed again.

 

Documents needed for removal process

    • Photograph: The directors’ Passport size photograph.  
    • PAN card: The directors’ Self-attested PAN card.
    • Proof of Residence: The director Aadhaar card/ Voter ID/ Passport/ Driving license.
    • Digital signature certificate: Digital Signature Certificate of both the ongoing director and the director to be removed. 
 

Process to Remove a Director

Step 1

First of all, we’ll be addressing all of your queries relates to remove a director.

Step 2

Our professionals will be preparing the agreement and master document. 

Step 3

We assist you in completing the full appointment process for remove a director. 

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FAQs on Remove a Director

The member who submits the statement must provide the company ‘special notice’ of a decision to remove a director at least 28 days before the board meeting at which the director may be removed.

under section 169 of the Companies Act, 2013 says that the shareholders can remove the director by providing an ordinary resolution in a common meeting. This right can't be carried away by the MOA, AOA, or any document or any contract.

A company director can be elected at any time after the company incorporation. Moreover, a director can quit or be removed by members (shareholders or guarantors) at any time, offering such actions do not violate any terms in the Companies Act 2006, the articles of organization or a director's service contract.

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