Removal of director
- 10+ Years of Experience
- 400 + In-House CAs, CS & Lawyers
- 99% SLA Delivery
- 10,000+ Pin codes Network in India
1000+
Happy Clients500+
Expert Advisors10+
Years of Experience
Rated 4.9 By 10,000+ Customers.
10K+ Global Brands That Trust Us!
Talk to an Expert
Expertise in REMOVAL OF DIRECTOR
(5)
Enquiry Form
Among Asia Top 100
Consulting Firm
Get Consultation
Lowest Fees
1000 + Clients.
Overview on Removal of Director
Each private company must have at least two directors, while a public
company must have at least three directors. A private company can remove a
director if they meet any of the incompetency criteria specified under the Act,
such as being absent from board meetings for over 12 months, engaging in
agreements that violate Section 184 provisions, being disqualified by a court
or tribunal, or being convicted of a crime and sentenced to imprisonment for at
least six months.
About Participation in the Removal of a Director from a Company
Shareholders holding shares worth at least Rs. 5,00,000 in paid-up capital or
possessing at least 1% of the total voting power can issue a special notice for
the removal of a director. Shareholders have the right to decide the meeting
date, but the notice cannot be sent more than three months before the meeting
and must be issued at least 14 clear days before the scheduled session.
The concerned director is given an opportunity to present their case before
the board. If shareholders and the board validate the objections, they can
proceed with the removal process after due consideration.
Reasons Behind the Resignation of Directors
1. Conflict
with the Board - Disagreements between directors can impact company
performance, leading to the removal of a director.
2. Mismanagement
or Unethical Practices - If a director is involved in or exposed to
illegal activities within the company, they may choose to resign or be removed
to prevent further complications.
3. Non-Compliance
and Violations - Directors who fail to adhere to statutory regulations
can face removal.
4. Withdrawal
of Nomination - Nominee directors, appointed by investors or financial
institutions, may resign once their purpose is fulfilled.
Eligibility Criteria to Be a Director
While there are no formal educational qualifications required, an individual
must meet the following criteria:
1. Age
Requirement: There is no fixed age limit, but directors must be
legally competent to enter contracts. Managing directors, full-time directors,
and independent directors must be between 21 and 70 years old.
2. Nationality:
At least one director in a company must be an Indian resident.
3. DIN
Requirement: A Director Identification Number (DIN) is mandatory for
eligibility.
4. Directorship
Limit: An individual can hold directorship in up to 20 companies, with
a cap of 10 in public companies.
5. Disqualifications:
Persons of unsound mind, bankrupt individuals, those convicted for seven or
more years, or directors with overdue returns in previous years are ineligible.
Types of Directors
Companies can appoint different types of directors based on their roles,
including managing directors, executive directors, and independent directors,
among others. According to Section 149(1) of the Companies Act, 2013:
1. A
public company must have at least three directors.
2. A
private company must have at least two directors.
3. A
One Person Company (OPC) requires at least one director.
4. A
public company can have up to 15 directors, with an option to increase this
number through a special resolution.
5. Companies
with a turnover of Rs. 300 Crore or paid-up capital of Rs. 100 Crore must
appoint at least one woman director.
Why Add or Remove a Director?
1. To
bring in fresh talent and expertise.
2. To
ensure compliance with legal requirements.
3. Due
to the incompetency of existing directors.
4. To
maintain the prescribed number of directors.
Documents Required for Removal of a Director
1. Passport-size
photograph of the director.
2. Self-attested
PAN card.
3. Address
proof (Aadhar Card, Voter ID, Passport, Driving License).
4. Digital
Signature Certificate (DSC) of the director being removed and the ongoing
director.
5. Identity
proof (Passport, Election Card, Driving License, Aadhar Card).
6. Contact
details (mobile number and email ID).
7. Apostilled
documents if the director is a non-resident of India.
8. Resignation
notice filed with the company.
9. Proof of dispatch and acknowledgment of form submission, if applicable.
Methods for Removal of Directors
1. By
the Board (Suo-moto Removal)
o
Shareholders can remove a director under Section
169 of the Companies Act, 2013, by passing an ordinary resolution in a general
meeting.
o
A seven-day notice must be sent to all
directors, followed by a general meeting with a 21-day clear notice.
o
The director is given an opportunity to be heard
before removal.
o
Forms DIR-11 and DIR-12 must be filed with
supporting documents.
2. Resignation
by the Director
o
The company must pass a resolution accepting the
resignation.
o
Form DIR-11 must be filed with the Registrar of
Companies (ROC) within 30 days.
o
Supporting documents, including resignation
notice and acknowledgment, must be submitted.
3. Absence
from Board Meetings
o
If a director is absent for three consecutive
board meetings over 12 months, they are deemed to have vacated their office
under Section 167 of the Companies Act, 2013.
o
Form DIR-12 must be filed to update the Ministry
of Corporate Affairs (MCA) database.
Legal Provisions for Director Removal (Companies Act, 2013)
1. Section
169(1): Requires an ordinary resolution for removal unless the
director was appointed by a tribunal.
2. Section
169(2): A special notice is required for removal.
3. Section
169(3): The company must inform the director and allow them to present
their case.
4. Section
169(4): The director can submit a written representation.
5. Section
169(5): A vacancy created by removal can be filled in the same
meeting.
6. Section
169(7): The removed director cannot be reappointed to fill the same
vacancy.
7. Section
169(8): Compensation is payable per contract terms.
8. Rule
79 of NCLT Rules, 2016: Aggrieved parties can appeal to the tribunal
using Form NCLT-1.
Checklist for Compliance
1. File
Form DIR-12 within 30 days of removal.
2. Attach
a special notice, meeting notice, resolution copy, and notice sent to the
director.
Penalties for Non-Compliance
Failure to file Form DIR-12
within the stipulated time leads to penalties:1. 1x
government fees (up to 15 days late)
2. 2x
fees (16–30 days late)
3. 4x
fees (30–60 days late)
4. 10x
fees (180+ days late)
5. 12x
fees plus compounding of offense if filed after 300 days
Fastzeal's Process for Director Removal
1. Select
'Order' and provide required details.
2. Submit
the application form.
3. Complete
the payment.
4. Fastzeal
files the required forms electronically with the Registrar of Companies.
5. Receive
confirmation of removal along with official documents within 2–3 business days.
For hassle-free assistance with director removal, trust Fastzeal to handle
the process efficiently and in compliance with legal requirements.
Frequently Asked Questions:
Send notice to its members clear seven days before the meeting, along with a copy of the representation copy.
The member who proposes the dismissal should provide a 'Special Notice' of a resolution to remove a director at least 28 days before the meeting at which the director may be excluded.
There may be no alternative option left for the Company than to seek the removalof Director by consulting to the Board and with a majority of shareholders under (AOA) of the Company.
Under the Companies Act, 2013, in a private company, a shareholder can appoint a director, so ideally only they hold the authority to remove directors. However, in proprietary companies, the removal of director can be commenced by a majority of directors if the constitution permits it.
While carrying change in the Board of directors, the Company must obtain consent from its Board and members, as required by passing a resolution and statutory limit after removalof Director or resignation.
No, even after the end of the tenure as director, a person can hold the shares in the Company only if it is not subscribed as a condition to appointment as provided by AoA.
The shares of the Company shall be transferred by way of completing the Share Transfer deed and by affixing the stamps as per the rates mentioned in the Stamp Act of the concerned State after the change.
As per Notice of 'ROC u/s 248(1)', this notice is the first step toward struck off of Company. If 'Company' fails to reply such notice within 30 days of publication of note, ROC shall strike off the name of Company in its records.
As per Section 166 Director has to adhere to the duties mentioned in such a section. In case the Company got struck off, they shall be personally responsible for such statutory liabilities.
In 30 days of date of the resignation, if the company fails to or doesn’t file the 'form DIR-12', a specific concrete Government fees- Penalty will be charged.
