REMOVAL OF DIRECTORS

The process of removing a director of the company could be done in five different ways. Directors of the company are responsible for managing, controlling, and directing the day to day transactions and affairs of the company. Since the directors are the most important part of the company. The powers to remove the directors are in the hands of the shareholders. They can be removed before the expiry of their tenure. Except for those directors who are appointed either by tribunals or by the government.

Different modes of removal of directors are enumerated under the companies act, 2013:

1. Removal of the director if he resigns himself.
2. Removal of directors by shareholders through Suo-moto.
3. If the director does not attend the three board meetings consequently.
4. Removal of director by tribunals
5. Removal of government by government

REMOVAL OF DIRECTOR IF HE RESIGNS HIMSELF

In a case before the Madras High Court[i], there were two directors, one of them died others wanted to resign. There are no such provisions in the article of the company. Later it was found there is a provision in a contract act 1956, section 318 says no director is entitled to compensation if he resigned.

In the new Act, the new section 168 may be noted. Company shall follow the steps to remove such director:

• A director may resign from his office by giving a notice in writing to the company.
• The board shall on mutual consent decide whether to accept resignation or not.
• Pass necessary resolutions for accepting the resignation by the director.
• The director sends a copy of his resignation with a detailed reason to the registrar within 30 days of the resignation prescribed manner.
• Once the resolution is passed, the director shall file his resignation on MCA through DIR-11 along with the resignation letter attached.
• Since DIR-11 is the responsibility of the director, the company shall file DIR-12 intimating to the registrar about the resignation of the director.
• Once DIR-12 is approved, the name of the director from the master data of company MCA is removed.

REMOVAL OF DIRECTOR SUO-MOTO BY THE BOARD

Shareholders have the authority to remove the director by passing an ordinary resolution in the general meeting.[ii] There are several steps in which the removal process can take place:

• Board meeting by offering seven days’ notice to all the directors.
• A resolution for holding an extraordinary general meeting will be passed with the resolution for the removal of the director. Subject to the approval of the shareholders on the day. When the board meeting will be held.
• There would be a general meeting by providing 21 days clear notice to the directors.
• In the meeting, the member would be supposed to vote on the matter. It depends upon the majority number of votes.
• Before the resolution being passed every director has the right to be heard.
• Once the resolution is passed, the same procedure needs to be followed. And the form DIR-11 and DIR-12 must be filed along with the same attachment of the board resolution and ordinary resolution.
• Once the form has been filed, the name of the director will be scratched off from the ministry of corporate affairs website.

DIRECTORS DID NOT ATTEND THREE CONSECUTIVE BOARD MEETING

In a consecutive three financial meetings, if a director does not attend. Then he shall be deemed to vacate his office. And the company shall file DIR-12 in the director’s name.

REMOVAL OF DIRECTOR BY CENTRAL GOVERNMENT

The central government has the power to remove a director in the following cases:

• Directors are found guilty of misconduct, fraud, and default.
• Carry such activity which is against business principal or policies.
• Any such transactions that cause injury to the trade policies of the industry.
• Directors indulge in transactions for defrauding their members or creditors.

REMOVAL OF DIRECTOR BY TRIBUNALS

Section 242(2)(h)[iii], the company appeals to the tribunals for preventing any mismanagement in the company. The receipt of such an appeal tribunal can terminate or set aside such an agreement of a company with its directors. The removed director does not get any compensation.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.