REMOVAL OF DIRECTOR
INTRODUCTION:
Section 169 of the Companies Act, 2013 accommodates the removal of directors. A company may by customary resolution remove a director given he isn’t selected by the council under Section 242 of the Act, before the expiry of the time of his office and after offering him a sensible chance of being heard. A unique notice will be expected of any resolution to remove a director under this part or to designate someone instead of a director so taken out. Such notice will be marked, either independently or all in all by a such number of individuals holding-1) at the very least 1% of total voting power on the date of the notice; or 2) shares on which a total amount of at least Rs. 5 lakh has been settled upon the date of the notice.
Be that as it may, a free director re-appointed for a second term via a unique resolution must be taken out by the company in the wake of getting the endorsement of shareholders via an exceptional resolution and after offering him a sensible chance of being heard.
Vacancy made by the removal of a selected director at the comprehensive meeting, under Section 169, can be filled by designating one more director in his place at the meeting where he is removed by giving exceptional notice of the planned arrangement. Such a director would hold office till the date up to which his ancestor would have held the workplace had he not been taken out.
If the vacancy is not filled up then it may be filled as a casual vacancy under Section 161(4), however, the director removed can’t be reappointed as a director by the board according to Section 169(7).
REASONS TO REMOVE A DIRECTOR:
A director can be removed for any of the accompanying reasons:
- Assuming they cause any of the exclusions indicated under the Companies Act
- Assuming they miss themselves from board meetings north of a year
- Assuming they go into agreements or game plans against the arrangements of Section 184 of the Companies Act
- If they are excluded by a request from a court or council
- If they are sentenced by a court of any offense and condemned to detainment for at the very least a half year
- If they have not kept the terms and conventions referenced in the Companies Act of 2013
- If they have surrendered willfully from their situation.
REMOVAL OF A DIRECTOR UNDER SECTION 169 OF THE COMPANIES ACT, 2013
Section 169 of the Companies Act, 2013 characterizes the removal of a director and the conditions under which it can occur. Investigate the different cases that bring about during the removal of directors:
- Where the director submits his resignation to the Board –
In such a case, follow these moves toward removing his name from the register of directors:
- The initial step is to hold a Board Meeting by giving seven days of Clear Notice which infers to 21 days’ notice barring the day on which it was sent and gotten.
- Then the Board will consider and decide if to acknowledge the director’s resignation or not.
- After tolerating the resignation, the Board will pass a resolution expressing acknowledgment of the director’s acquiescence.
- The following stage that the active director and Board need to take is to document a Form DIR – 11. Join a proof of the resignation letter’s conveyance and a duplicate of the resignation letter alongside the form.
- Subsequently, the company should document a form DIR – 12 with the Registrar of Companies (ROC) alongside the Board Resolution and Resignation letter.
- Lastly, after filling out every one of the forms, the name of the director will get prohibited from the expert information of the company on the authority entrance of the MCA.
- Suo-Moto Using The Board-
Shareholders hold the ability to remove a director, according to Section 169 of the ‘Companies Act 2013’. The strategy should be possible by passing a customary choice in a comprehensive meeting, other than for the situation, the Director was not selected by the Central Government or the Court.
- A notice ought to be joined to every one of the directors to have a board meeting by permitting seven days. Also, every one of the overseers of the Company will get data concerning the removal of the Director.
- Brought about the notice, a resolution will be passed for having the comprehensive meeting. The topic of taking on the choice is for the authorization of the shareholders on the day when the board meeting will be held.
- There will be a comprehensive meeting held in the wake of introducing 21 days of the express statement to the directors. The choice will be made given most of the votes.
- In the absolute initial section, the considered Director will get a choice and opportunity for being heard.
- After the statement of the resolution, the Director ought to record two forms Form DIR-11 and Form DIR-12 with connections to the ‘Board Resolution.’
- At the most extreme, the name of the assent director will be dispensed with from the ‘Ministry of Corporate Affairs (MCA)’ data set and subsequently on the site as well.
- In Case the Director Does not Attend 3 Board Meetings in a Row-
According to section 167 of the Companies Act, 2013 on the off chance that a Director doesn’t go to a Board Meeting for quite a long time, beginning from the day on which he was missing at the principal load-up meeting even after giving due notice for every one of the meetings, it will be considered that he has emptied the workplace and a Form DIR – 12 will b recorded on his name and his name will b removed from the Ministry of Corporate Affairs.
RESULTS OF NOT FILLING FORM DIR-12:
DIR-12 must be recorded somewhere around 30 days from the date of resignation. On the off chance that the company neglects to do as such, the accompanying punishments will apply:
- Following 30 days – in 60 days or less: two times the public authority expenses
- Following 60 days – in 90 days or less: multiple times the public authority expenses
- If it surpasses 90 days: multiple times the public authority expenses
- On the off chance that it surpasses 180 days: multiple times the public authority expenses will be reserved for the intensifying offense also
FAQs:
Que: What are the preconditions before removing a director?
Ans: The director is offered a chance to be heard before their removal.
Que: Does the Companies Act reveal any exemptions for the removal of the director?
Ans: Indeed, there is a special case for the removal of the director as expressed by the company act 2013 i.e., the company shouldn’t remove the accompanying referenced people from the place of director: –
- A director which is elected by the Tribunal
- The company has used the choice to choose at the very least 2/3 of the absolute number of directors as Stated by the principle of proportional representation.