Remove Director
Removal of Director from a Company
The removal of a director from a company typically follows these steps:
- Board Resolution: The board of directors must pass a resolution for removal, usually with a majority vote.
- Special Notice: A special notice must be served to the director about the proposed resolution.
- General Meeting: A general meeting of shareholders is held to approve the removal resolution, requiring a special majority vote.
- Intimation to ROC: File Form DIR-12 with the Registrar of Companies (RoC) within 30 days of removal, along with necessary documents.
- Update Records: Update company records and notify concerned authorities of the director’s removal.
Reasons for Director Removal
Directors can be removed from a company for various reasons, including:
- Non-Performance: Failure to fulfill duties or achieve expected results.
- Misconduct: Breach of fiduciary duties, ethical violations, or fraudulent activities.
- Conflict of Interest: Engaging in activities that compete with the company’s interests.
- Legal Reasons: Disqualification under the Companies Act, 2013, or other regulatory violations.
- Loss of Confidence: Lack of shareholder or board support due to leadership issues or strategic disagreements.
Methods for Director Removal from a Company
Directors can be removed from a company through several methods, typically governed by the company’s articles of association and the Companies Act, 2013:
Board Resolution: The board of directors can pass a resolution to remove a director, typically requiring a majority vote of the board members.
Shareholder Resolution: Shareholders can vote to remove a director through a special resolution at a general meeting, requiring approval by a specified majority of shareholders.
Court Order: In cases of misconduct or legal disqualification, a court may order the removal of a director upon application by shareholders or regulatory authorities.
Automatic Removal: Directors may be automatically removed upon disqualification under statutory provisions or the company’s articles.
Proper adherence to legal procedures and compliance with regulatory requirements ensures the validity and legality of director removal from a company.
Board Resolution: The board of directors can pass a resolution to remove a director, typically requiring a majority vote of the board members.
Shareholder Resolution: Shareholders can vote to remove a director through a special resolution at a general meeting, requiring approval by a specified majority of shareholders.
Court Order: In cases of misconduct or legal disqualification, a court may order the removal of a director upon application by shareholders or regulatory authorities.
Automatic Removal: Directors may be automatically removed upon disqualification under statutory provisions or the company’s articles.
Proper adherence to legal procedures and compliance with regulatory requirements ensures the validity and legality of director removal from a company.
Remove Director FAQ's
Directors can be removed by shareholders through a special resolution or by the board of directors through a board resolution, depending on the company's articles of association and the Companies Act, 2013.
The procedure typically involves issuing a special notice of the proposed resolution, holding a general meeting to pass the resolution with a specified majority, and filing Form DIR-12 with the Registrar of Companies (RoC) within 30 days of removal.
Yes, a director can challenge their removal in court if they believe the removal process was conducted unfairly, illegally, or against the company's articles of association.
Directors can be removed for reasons such as non-performance, misconduct, conflict of interest, loss of confidence, or legal disqualification under the Companies Act, 2013.