Removal of Director

Introduction

The removal of a director refers to the process by which a company ends the appointment of a director before the expiry of their term. The Companies Act, 2013, provides the statutory framework for such removal to ensure transparency and protection of shareholders’ interests.

  • A director may be removed for reasons including but not limited to:
  • Non-performance or misconduct
  • Breach of fiduciary duties or company policies
  • Disqualification under the Companies Act
  • Loss of confidence of the shareholders
  • Statutory Provisions for Removal
  • Section 169 of the Companies Act, 2013 governs the removal of directors.

Notice of Resolution

A special notice of intention to move a resolution for removal of the director must be given to the company at least 14 days before the meeting.

Circulation of Notice

The company must forward the special notice to the concerned director and all shareholders.

Opportunity to be Heard

The director proposed to be removed has the right to make a representation in writing and to be heard at the general meeting.

General Meeting

The company holds an extraordinary general meeting (EGM) or annual general meeting (AGM) to consider the resolution.

Passing of Resolution

The removal requires a special resolution (i.e., approval by at least 75% of members present and voting).

Filing with Registrar of Companies (RoC)

The company must file Form DIR-12 with the RoC within 30 days of passing the resolution.

  • The director removed from office is entitled to receive any remuneration or benefits due up to the date of removal.
  • Removal of a director does not affect any claim for damages for breach of contract, if any.
  • A casual vacancy caused by removal may be filled by the Board or shareholders as per the Articles of Association.
  • Directors appointed by regulatory or government authorities may have specific procedures for removal.

  • Directors appointed by the Tribunal or Court cannot be removed except by the same authority.
  • Removal of independent directors must comply with additional provisions under Section 149(10) and Schedule IV of the Companies Act, 2013.

  • Failure to comply with the procedure for removal may render the removal invalid and attract penalties.