Removal of Director

Removal of Director

Board of director of company play important role in business management. Who is responsible for day to day business operations of company. Director of company can be remove from company due to breach of contract, negligence or any other situation. For this process shall comply with the provisions of the Companies Act,2013. Section 169 of Companies Act,2013 deals with the provisions of Removal of Director.

Removal of Director as per following ways:

Removal by Shareholders

Shareholders can remove a director by passing an ordinary resolution at a general meeting. The director who is subject to removal should be given a reasonable opportunity to be heard at the meeting.

Special Notice

 A special notice must be given to the company at least 14 days before the general meeting, indicating the intention to move a resolution for the removal of a director. The director concerned has the right to be heard at the meeting.

Ordinary Resolution

The removal of a director is done by passing an ordinary resolution in a general meeting. This resolution must be supported by the majority of shareholders present and voting.

Board Removal

In some cases, the board of directors may have the power to remove a director. However, the power of the board to remove a director can only be exercised if it is specifically provided for in the articles of association of the company.

Vacancy Filling

If a director is removed from the board, the vacancy created can be filled by the appointment of another director in accordance with the procedures outlined in the Companies Act and the articles of association.

Process of Removal of Director:

Under the MCA 21 (Ministry of Corporate Affairs) framework in India, the process of removal of a director involves certain steps and compliances. Here’s an overview of the process:

1. Review the Articles of Association (AoA) and ensure compliance: The AoA of the company will outline the provisions and procedures for the removal of a director. It is essential to review the AoA and ensure that the proposed removal follows the prescribed guidelines.
2. Board Meeting: A board meeting needs to be called, and the proposed removal of the director should be included as an agenda item. The board of directors will discuss the matter and pass a resolution for the removal.
3. Special Notice: After the board resolution, a special notice regarding the removal of the director must be sent to all the directors of the company at least 14 days before the general meeting.
4. General Meeting: A general meeting of the company needs to be convened, and the agenda should include the removal of the director. The special notice and the reasons for removal should be discussed during the meeting. A special resolution for the removal should be passed by the shareholders.
5. Intimation to the Registrar of Companies (RoC): Once the resolution for removal is passed, the company must file the necessary forms and notify the RoC within 30 days. The specific form to be filed is Form DIR-12, which contains the details of the removed director.
6. Filing Documentation: Along with Form DIR-12, supporting documents such as board resolutions, special notices, and minutes of the general meeting should be filed with the RoC.

Forms required for Removal of Director

For removal of Director following E-forms shall be required under MCA 21:

E-form MGT-14

E-form DIR-12

Penalty

If in case company fails to comply with provision of companies Act,2013 related to Removal of Director the Company and every officer of company who is default shall punishable with fine not less than 50,000 but which extend to 500,000.