Setupfilings

Removal of Director

Removal of Director

Every Public Limited has to have a minimum of three directors; And Any Private Limited company has to have a minimum of two directors at any given time.

The most three possible cases during the removal of a director.

Where the Director Himself Gives his Resignation

The concerned director submits his resignation to the Board. during this case, the subsequent steps are going to be taken to get rid of his name from the register of directors:

• The company will hold a committee meeting by giving seven days of clear notice (Clear notice means 21 days notice excluding the day on which the notice was sent and received.
• When the Board meets, they’re going to discuss amongst themselves and choose whether to simply accept the resignation or not.
• Once the Board accepts the resignation of the director they’re going to pass a Board resolution accepting the resignation within the following format:
• “RESOLVED THAT the resignation of Mr. XYZ be and is hereby accepted with immediate effect
• “FURTHER RESOLVED THAT the Board places on record its appreciation for the help and guidance provided by MR. XYZ during his tenure as Director of the Company”
• “RESOLVED FURTHER THAT directors of the corporate be and are hereby jointly authorized to try to to all the acts, deeds and things which are necessary to the resignation of the aforesaid person from the directorship of the corporate
• After the passing of the resolution, form DIR – 11 has got to be filed by the outgoing director along side the Board Resolution, Proof of delivery of the resignation letter and a replica of the resignation letter.
• While the filing of DIR – 11 is that the responsibility of the director, form DIR – 12 is that the responsibility of the corporate which has got to be filed with the Registrar of Companies along side the Resignation letter and therefore the Board Resolution.
• After filing all the forms, the name of the director are going to be faraway from the master data of the corporate on the Ministry of Corporate Affairs website.

To Remove a Director Suo-moto by the Board

A Company has the authority to get rid of a Director by passing a standard Resolution, given the Director wasn’t appointed by the Central Government or the Tribunal.

• A committee meeting are going to be called by giving seven days’ notice to all or any the administrators . A special notice will attend the administrators informing them about the removal of the director.
• On the day of the committee meeting , a resolution for the holding of a unprecedented general meeting are going to be passed along side the resolution for the removal of the director subject to the approval of the shareholders.
• A general meeting are going to be held by giving 21 days clear notice. within the meeting, the members are going to be asked to vote on the matter. If the bulk is in favour of the choice , the resolution are going to be passed.
• Before the passing of the resolution, a chance of being heard are going to be given to the director.
• After the passing of the resolution, an equivalent procedure are going to be followed, and therefore the forms DIR – 11 and DIR – 12 are going to be filed along side an equivalent attachments of the Board Resolution, Ordinary Resolution.
• After the filing of the forms, the name of the director are going to be struck faraway from the Ministry of Corporate Affairs website.

In Case the Director doesn't Attend 3 Board Meetings during a Row.

 As per section 167 of the businesses Act, 2013 if a Director doesn’t attend a committee meeting for 12 months, ranging from the day on which he was absent at the primary committee meeting even after giving due notice for all the meetings, it’ll be deemed that he has vacated the office and a Form DIR – 12 will b filed on his name and his name will faraway from the Ministry of Corporate Affairs.

Procedure for removal of director from company

1. A Special notice of the intention to maneuver a resolution for the removal of director be furnished by No. of members (according to requirement of Section- 115 of Companies Act, 2013) to the corporate a minimum of 14 days before the meeting at which it’s to be moved, excluding the day on which the notice is served and therefore the day of the meeting. (Section 169). 

2. Section 115-Special notice to Company- Only shareholder/s holding not but 1% of total voting power or holding shares on which an aggregate sum of not but Rs. 5,00,000 has been paid up as on the date of notice, can send special notice to the corporate for removal of director. an equivalent should be signed by the concerned shareholders.

3. the corporate must give intimation to the concerned director of the intended resolution by sending a replica of the special notice received by it, forthwith on receipt thereof. The director shall have the proper to be heard on the resolution at the meeting.

4. The director, who is sought to be removed, can make a representation in writing against his removal and request the corporate to notify it to the company’s members [section 169]. If the director requests the corporate to notify the members of the corporate his representation against his removal and therefore the representation is of reasonable length and it’s been received not too late, the corporate must.
• Mention within the notice of the resolution to be moved at the annual general meeting, the very fact of the representation having been received; and
• Send a replica of the representation to each member along side the notice of the meeting if the representation has been received before sending the notice of the meeting or separately if the representation has been received after sending the notice of the meeting.

5. Hold and convene a General meeting & pass a standard resolution for the removal of Director.

6. File e-form no. DIR-12with the Registrar of Companies within 30 days of passing the resolution.

7. The vacancy is made under this section after the removal of the director then within the same meeting of the removal another director is being appointed for nonce , and a special notice of the intended appointment is provided.

8. The newly appointed director has got to hold the post until the duration up to the new formal appointment of the director is formed .

9. When a director is removed as aforementioned, his office vacates automatically u/s 167.

10. The removed director is responsible for the damages and compensation which is required to be payable to him in lieu of his removal or termination consistent with the prescribed terms and conditions of the appointment.

PROCDURE FOR APPOINTMENT OF DIRECTOR

basic

Removal of director where Already having DIN And DSC.

Rs.2000/-

Standard

Removal of directorand Addition of director Already Having DSC.

Rs. 4899/-

Premium

Removal of director and Addition of director Already Having DSC. Inclusive of One Din to Board of Director.

Rs. 7899/-

frequently asked questions

Ans: The shareholders of a corporation may pass a standard resolution:

  1. To get rid of the director of the company; or
  2. To appoint someone in situ of a director so removed;before the expiry of the amount of his office after giving him an inexpensive opportunity of being heard.

Ans: Step 1: Special notice of the intention to maneuver a resolution at a members’ meeting for the aim of removal/ replacement of a director shall tend to the corporate under Section 115 of the Act, by such number of members as prescribed.

Step 2: Post receipt of notice, the corporate shall:

  • immediately forward its copy to the concerned director,
  • inform its members about such resolution immediately but not later than 7 days before the meeting*.

*The day of dispatch of notice and day of the meeting shall be excluded in calculation of days.

Step 3: After convening the overall Meeting, the resolution passed shall be filed in Form DIR-12 within 30 days. just in case special resolution is passed, it shall be filed in Form MGT-14 also .

Ans: No, the Act doesn’t allow removing a director who has been appointed by the National Company Law Tribunal (“Tribunal”) under Section 242 of the Act, which deals with right of appointment of director by the Tribunal just in case of oppression or mismanagement.

Ans: The Special notice shall be signed either individually or collectively by number of members holding (as on the date of notice):

  • not but 1% of total voting power; or
  • shares on which an aggregate sum of minimum Rs. 5 lakh is paid up;

Also, the Special notice shall be circulated to the members within the same manner because the notice of general meetings is circulated.If the circulation of notice as above isn’t feasible, the special notice shall be published a minimum of 7 days* before the meeting in:

  • English language in English newspaper; and
  • in vernacular language during a vernacular newspaper;

both having wide circulation within the State where the registered office of the corporate is situated. Also the notice shall even be posted on the Company’s website, if any.

Ans: Pursuant to Section 163 of the Act, the articles of a corporation may contain the supply for the appointment of a minimum of two-thirds of the entire number of the administrators of a corporation in accordance with the principle of representation .In such case, shareholders of a corporation don’t have the choice to exercise their right to get rid of a director.

Ans: The Special notice shall be sent not before 3 months but a minimum of 14 days before the date of meeting at which the resolution is to be moved, i.e.

Minimum time gap between notice sent and date of meeting: 14 daysMaximum time gap between notice sent and date of meeting: 3 months

Ans: If the special notice provided by the members specifies intention of appointment of latest director in situ of director being removed, then the vacancy created by removal of director are often filled as per such notice.However, if the vacancy isn’t so filled, then it’s going to be filled as an off-the-cuff vacancy in accordance with the provisions of the Act.

Ans: The concerned director is entitled to be heard on the resolution at the meeting.

  • If the concerned director makes a representation in writing to the corporate and requests that an equivalent be notified to the members of the company:If there’s sufficient time, company shall:
  • state the very fact of the representation having been made within the notice circulated to members; AND
  • send a replica of representation to all or any the members (whether before or after receipt of the representation by the company)

If there’s insufficient time/ thanks to default of the company:

  • the director may require that the representation shall be read out at the meeting on the appliance of the company/ aggrieved person, if the Tribunal is satisfied that the rights conferred are being abused to secure needless publicity for defamatory matter, then the representation needn’t be read out.

The Tribunal may order the company’s costs on the appliance to be paid in whole / part by the director whether or not that he’s not a celebration thereto .

 

Ans: The newly appointed director shall hold office till the date up to which his predecessor would have held office if he had not been removed.

Ans: albeit a director is removed by the corporate , he shall be entitled to compensation/ damages payable to him.