Removal of Director

Author
By Hiral Vakil on March 11, 2019

Director is a person elected by shareholders for managing the affairs of the company. Directors in a company may need to resign or is removed by the board or shareholders.

1. RESIGNATION OF DIRECTOR:

The director will submit the resignation to the board. Following steps will be taken by the company:

  • The company will hold a Board Meeting to accept the resignation of director.
  • After passing of the resolution Form DIR-11 has to be filed by the outgoing director along with board resolution and copy of resignation letter.
  • Also the board is required to intimate ROC about resignation of director within 30 days in Form DIR-12.
  • After filing all the forms name of director will be removed from the master data of the company on MCA.

2. REMOVAL OF DIRECTOR BY BOARD:

The company has authority to remove a director by passing an Ordinary Resolution only if the director was not appointed by the Central Government or the Tribunal.

  • A Board Meeting will be called by giving seven days’ notice to all directors informing about the removal of director.
  • During the Board Meeting,a resolution for holding Extraordinary general meeting will be passed along with resolution for removal of director subject to approval of shareholders.
  • A general meeting will be held giving 21 days clear notice and members will be asked to vote on the matter.The resolution will be passed if decision is in majority.
  • Before passing the resolution opportunity of being heard will be given to the director.
  • After passing of resolution Form DIR-11 and DIR-12 will be filed along with board resolution and ordinary resolution.
  • After filing the forms name of director will be removed from MCA.

3. REMOVAL OF DIRECTOR BY SHAREHOLDERS:

Shareholders holding not less than 1% of total voting rights or holding shares not less than five lakh rupees paid up can issue a special notice for removal of director.

  • Such special notice shall be given at least 14 clear days before the date of meeting at which resolution for removal of director is to be considered.
  • Notice convening the meeting shall be given to all members and if not possible publish an advertisement in circulated newspaper not less than 7 days before the meeting.
  • Notice shall also be sent to director whose removal is to be considered.The director has right to be present at the meeting and has right to be heard.
  • Members will pass a ordinary resolution to remove the director.
  • File Form DIR-12 with the ROC within 30 days of passing the resolution along with special notice received from shareholder,special notice given to the director concerned,notice of EGM to other shareholders and copy of ordinary resolution passed at EGM.

4. IN CASE DIRECTOR DOES NOT ATTEND 3 BOARD MEETINGS IN ROW:

If director does not attend a board meeting for 12 months even after giving due notice for all meetings it will be deemed that he has vacated the office and DIR-12 will be filed and his name will be removed from MCA.

FAQs:

1. What are the compliance’s for resignation/removal of director?

  • DIR-9: A report by a company to ROC for intimating the disqualification of a director
  • DIR-11: Notice of Resignation of a director to Registrar(By the director)
  • DIR-12: Notice of Resignation of a director to Registrar(By the company)
  • DIR-5 : Application for surrender of DIN
  • DIR-10: Form of application for removal of disqualification of directors.