Remove a Director
At JuroLegal, we provide end-to-end legal and procedural assistance for the removal of a company director in compliance with the Companies Act, 2013 and Ministry of Corporate Affairs (MCA) regulations. A director may be removed by the Board, shareholders, or through legal action, depending on the circumstances. Our experts handle the complete process — from drafting board and shareholder resolutions, issuing notice to the concerned director, conducting the general meeting, to filing Form DIR-12 with the Registrar of Companies (ROC).
Company directors oversee the management and operations of a business, while shareholders own the company. Situations may arise where shareholders decide to remove a director due to poor performance or other concerns, or a director may choose to resign. Removing a director is a significant corporate action that demands careful consideration and strict adherence to the legal framework provided by the Companies Act 2013 or relevant local laws. Whether initiated by an ordinary resolution, board resolution, or judicial order, the process must be conducted fairly, transparently, and in the company’s best interest.
As mentioned above, A director may be subject to removal for any of the following reasons:
- Incurring any disqualifications as specified under the Companies Act.
- Prolonged absence from board meetings spanning over 12 months.
- Entering into contracts or agreements contrary to the provisions outlined in Section 184 of the Companies Act.
- Receiving a disqualification order from a court or tribunal.
- Being convicted by a court for an offense and sentenced to a minimum of six months in prison.
- Failure to adhere to the terms and regulations stipulated in the Companies Act of 2013.
- Voluntarily resigning from their position.
Section 169: This section pertains to the removal of directors, detailing the legal procedures and requirements for director removal.
Section 115: This section likely relates to the appointment of additional directors, though providing specific details without additional context is challenging.
Section 163: This section allows for proportional representation in the appointment of directors, which can influence the director removal process depending on the company’s governance structure.
Rule 23 of the Companies (Management and Administration) Rules, 2014: This rule is related to the management and administration of companies, providing specific guidelines or regulations concerning director removal and related procedures.
- The following mandatory requirements must be followed for the removal of a director:
- A Special Notice, as per Section 115 of the Companies Act 2013, must be issued.
- The Special Notice must be sent to the director at least 14 days before the resolution is passed.
- The concerned director must be given an opportunity to present their case, with their representation
- submitted in written form.
- A director who has been removed from office cannot be reappointed.
When a director voluntarily tenders their resignation, the following steps are taken to remove their name from the register of directors:
- Board Meeting Notice: The Company convenes a Board Meeting, providing clear notice, which typically means a notice period of 21 days, excluding the day on which the notice was sent and received.
- Resignation Discussion: During the Board Meeting, board members discuss and deliberate on whether to accept the Director’s resignation.
- Board Resolution for Resignation: Upon agreement, the Board passes a formal resolution to accept the Director’s resignation.
- Filing Form DIR-11 (Director’s Responsibility): The outgoing Director takes responsibility for filing Form DIR-11. This form must include the Board Resolution, proof of delivery of the resignation letter, and a copy.
- Filing Form DIR-12 (Company’s Responsibility): The Company is responsible for filing Form DIR-12 with the Registrar of Companies (RoC). This filing should include the resignation letter and the Board Resolution.
- Removal of Director Name from MCA: After completing all necessary form submissions and formalities, the Director’s name will be officially removed from the Company’s master data on the Ministry of Corporate Affairs website.