Removal of Director
Ensure a compliant director removal process with proper shareholder approval, statutory procedures and ROC filings under the Companies Act, 2013.
What Is the Removal of a Director?
Removal of a director means terminating their office before the expiry of their tenure in accordance with the applicable provisions of the Companies Act, 2013.
The process generally involves special notice, an opportunity for the director to be heard, shareholder approval and the applicable statutory filings.
Legal Framework
Section 169 of the Companies Act, 2013 governs the removal of directors by shareholders, subject to applicable exceptions and conditions.
Procedure for Removal of a Director
Follow the applicable statutory procedure to ensure the removal is properly documented and reported.
Special Notice
Under Section 169(2), a special notice is required for a resolution to remove a director. The company must send a copy of the notice to the director concerned in accordance with Section 169(3).
Section 169(2) & 169(3)Opportunity to Be Heard
The director must be given a reasonable opportunity of being heard at the general meeting. The director may also submit written representations in accordance with the applicable statutory provisions.
Section 169(3) & 169(4)Shareholder Approval
Removal is generally approved by an ordinary resolution at a general meeting, subject to applicable exceptions. A special resolution applies in the specified case of an independent director reappointed for a second term.
Section 169(1) & 149(10)ROC Filing
After the director ceases to hold office, the company must file Form DIR-12 with the Registrar of Companies within the applicable statutory timeline, generally 30 days from the date of cessation.
Form DIR-12What to Keep in Mind
Consider these important points before initiating a director removal process.
Proper Notice
Ensure the special notice and communication requirements are complied with.
Fair Hearing
Provide the director with the statutory opportunity to be heard and make representations.
Accurate Documentation
Maintain the required notices, meeting records, resolutions and supporting documents.
Timely ROC Filing
Complete Form DIR-12 and other applicable compliance requirements within the prescribed timelines.
Circumstances in Which a Director May Cease to Hold Office
A director's office may become vacant or end under different statutory circumstances. Each situation must be assessed under the relevant provisions of law.
Disqualification
A director may be subject to disqualification under Section 164, subject to the applicable statutory provisions.
Section 164Absence from Board Meetings
The office may become vacant if the director remains absent from all Board meetings held during a period of 12 months, with or without leave of absence.
Section 167(1)(b)Insolvency
The office may become vacant if the director incurs a specified insolvency-related circumstance under the applicable law.
Section 167(1)(a)Unsound Mind
The office may become vacant where a competent court declares the director to be of unsound mind, as provided by law.
Section 167(1)(d)Breach of Duties or Misconduct
A breach of fiduciary duties or misconduct may lead to appropriate legal action or removal by shareholders, subject to the applicable law and procedure.
Applicable legal provisionsShareholders' Resolution
Shareholders may remove a director before the expiry of their tenure in accordance with the conditions and exceptions under Section 169.
Section 169Tribunal Intervention
Directorship may be affected by applicable Tribunal powers or orders, including relevant provisions concerning oppression and mismanagement.
Including Section 242, where applicableNeed Help with Director Removal Compliance?
Get professional assistance with the applicable procedure, documentation, shareholder resolutions and ROC filings.
- Special notice & hearing
- Member resolution
- DIR-12 filing