Remove Director.

Removal of Director from a Company ⚖️🏢

Directors oversee the management and operations of a company, while shareholders hold ownership. Situations may arise where shareholders decide to remove a director due to poor performance, misconduct, or other concerns, or a director may voluntarily resign. Removing a director is a significant corporate action requiring strict adherence to legal procedures under the Companies Act, 2013 or applicable local laws.

Whether through shareholder resolutions, board decisions, or judicial orders, the process must be fair, transparent, and in the best interest of the company.

IndiaFills specialises in guiding businesses through this complex process, ensuring full legal compliance and smooth execution. Contact us today for expert assistance in director removal or resignation.

Reasons for Director Removal 🚫

Under the Companies Act, 2013:

• A private limited company must have at least two directors to start operations.
• Shareholders have the power to remove a director at a General Meeting, except government-appointed directors.
• Directors may be removed if they:
  • Are disqualified as per the Companies Act.
  • Fail to attend board meetings for 12 consecutive months.
  • Violate Section 184 by engaging in prohibited transactions.
  • Are prohibited by court or tribunal orders.
  • Are convicted of a criminal offence with a sentence of six months or more.
  • Do not comply with the Companies Act’s regulations.
  • Choose to resign voluntarily.

Methods of Director Removal 🔄

1. Voluntary Resignation by the director.
2. Removal due to Absence: Director fails to attend board meetings for 12 months.
3. Shareholder-initiated Removal through voting at a General Meeting.

Legal Framework Governing Director Removal 📜

• Section 169, Companies Act, 2013 – Procedure to remove a director.
• Section 115 – Relates to appointment and understanding removal.
• Section 163 – Fair representation and decision-making.
• Rule 23, Companies (Management and Administration) Rules, 2014 – Guidelines on managing and removing directors.

Key Requirements for Director Removal ✅

• Special Notice: Must be issued 14 days before the resolution as per Section 115.
• Notice to Director: Director must be informed and given time to respond.
• Right to Be Heard: Director can submit written representation or present at the meeting.
• No Reappointment: Removed director cannot be reappointed.
• Form DIR-12 Filing: Mandatory with ROC to notify official removal.

Step-by-Step Procedure for Director Removal 📝

1. Director’s Voluntary Resignation

• Director submits written resignation to the company.
• Effective from the date company receives notice or a later specified date.
• Board Meeting is convened to acknowledge resignation.
• Company files Form DIR-12 with ROC within 30 days, attaching resignation notice and board resolution.
• Resigning director may also file Form DIR-11 with ROC within 30 days.
• Register of Directors updated accordingly.
• Public companies must notify stock exchanges as per SEBI regulations.

2. Removal Due to Non-Attendance of Board Meetings

• If a director misses 12 consecutive months of board meetings without leave, their office is deemed vacated (Section 167).
• Company files Form DIR-12 with ROC to notify vacancy.
• MCA database is updated to reflect removal.

3. Removal by Shareholders

• Board meeting called with 7 days’ notice to pass resolution for an Extraordinary General Meeting (EGM).
• EGM notice sent to shareholders with a 21-day notice period.
• Shareholders vote on ordinary resolution to remove director.
• Director has the right to be heard before resolution is passed.
• Post-approval, company files Form DIR-12 and director files Form DIR-11 with ROC.
• MCA database is updated after formalities.

Penalties for Delayed Filing of Form DIR-12 ⏰💸

Failure to file Form DIR-12 within 30 days attracts penalties:

Timely filing is critical to avoid penalties and maintain compliance.

Impacts and Considerations of Director Removal ⚠️

• Director loses all management authority immediately.
• Any legal breach of removal procedure may result in litigation.
• Possible impact on company reputation; process should be handled discreetly.
• Company must update records under various laws including GST, EPF, ESI, Labour Laws, and other industry-specific regulations.

Why Choose IndiaFills for Director Removal? 🌟

• Expertise: Skilled professionals with deep knowledge of corporate laws and procedures.
• Compliance: Guaranteed adherence to all legal norms, reducing risk.
• Comprehensive Support: Assistance from initial consultation to ROC filings.
• Tailored Solutions: Customized advice matching your company’s unique requirements.

Ensure a smooth, compliant, and professional director removal process with IndiaFills.

If you need help with director removal or related corporate compliance, contact IndiaFills today for expert guidance!