A private limited company by mandates of The Companies Act, 2013, needs to have a minimum of 2 directors before the commencement. The removal of a director from the company can be voted out for in the General Meeting of the company by the shareholders except in cases of appointment by the central government.
The director of the company can be removed when:
- If the director incurs any act leading to disqualification under the Act
- Is absent from the Board meeting for over 12 months
- Voluntary resignation from the director
- Is disqualified by the court/Tribunal
- Enters into contracts against the provisions of section 184
- Is convicted under charges and is sentenced for imprisonment for not less than 6 months
Process of removal in case of self resignation
- The company will provide a notice, 7 days prior, to convene a Board meeting. The days exclude the day of sending and receiving the notice.
- The Board will, decide after discussions and hearing out the points put forth by the director concerned, to accept or reject the resignation.
- If the resignation is accepted, the Board will pass a resolution accepting the following format:
RESOLVED THAT the resignation of the director be and is hereby accepted with an immediate effect.
FURTHER RESOLVED the Board places on record its appreciation for the assistance and guidance provided by the director during his tenure as Director of the Company.
RESOLVED FURTHER THAT directors of the company be and are hereby jointly authorized to do all the acts, deeds, and things which are obligatory to the resignation of an aforesaid person from the directorship of the Company.
- Upon passing the resolution, the director concerned has to fill the form DIR-11 and submit the Board Resolution, Copy of Resignation letter, and Proof of Delivery of resignation letter.
- The company is responsible to fill out form DIR-12 with the Registrar along with the resignation letter of the outgoing director.
- Upon completion of all the formalities, the name od the director to be removed will be removed from the master data of the company on the MCA’s website.
Process of removal in case of non-attendance from 3 consecutive board meetings
As per section 167 of the ACT, 2013 if a director didn’t attend the Board Meeting for 12 months, starting from the day on which he/she was absent at the first meeting even after sending him/her due notice for all meeting, it will be considered that he/she has abandoned the office.
The company fills out a form DIR — 12 and undertakes the formalities for removal of the director’s credentials from the master data of the company from MCA’s records.
Process in case of suo moto removal by the board
The procedure is listed under section 169 of the ACT.
- There should be a Board Meeting by offering seven days of notice to all the directors. Furthermore, an exceptional notice will go to the directors informing them about the removal of the director.
- A resolution for holding an extraordinary general meeting will be passed along with a resolution for the removal of the director which shall be subject to Board approval on the day of the meeting.
- Another meeting shall be held with a notice of 21 days. In the meeting, the members would be supposed to vote on the matter. If the majority votes in favour of the decision, then the resolution will be passed.
- In the meeting, the members would be supposed to vote on the matter. If the majority votes in favour of the decision, then the resolution will be passed.
- After the resolution is passed, the same procedure needs to be followed, and the Form DIR-11 and DIR-12 must be filed along with the same attachments of the Board Resolution, Ordinary Resolution.
- After the form has been filed, the name of the director will be scratched off from the Ministry of Corporate Affairs website.