There should always be two directors in every private company, and three directors in every public company. Let us consider three scenarios during the removal of a director:
A resignation letter from the director
A director resigns from the Board. In such a case, the following steps are taken to remove his name from the register of directors:
- In order to convene a Board Meeting, the company must give seven days’ notice (clear notice is a 21-day notice excluding the date on which the notice was sent and received).
- A decision will be made by the Board when they meet whether to accept the resignation or not.
- A Board resolution accepting the resignation of a director will be passed once the resignation is accepted by the Board:
- I hereby accept the resignation of Mr. XYZ with immediate effect.”
- « RESOLUTION: That the Board records its thanks and appreciation for the guidance and assistance M. XYZ provided during his tenure as a Director of the Company »
- “FURTHER RESOLVED THAT all the actions, deeds, and things necessary for the resignation of the aforesaid person as a director of the Company shall be and are hereby authorized to be done by every director of the company in a joint and several manner.”
- In addition to the Board Resolution, the outgoing director must file form DIR – 11 with a copy of the resignation letter, proof of delivery of the resignation letter, and the Board Resolution.
- Director DIR-11 forms must be filed by directors with the Registrar of Companies along with a resignation letter and a board resolution. Form DIR-12 must be filed by the company with the Registrar of Companies.
- On the Ministry of Corporate Affairs website, upon completion of all forms, the name of the director will be removed from the Company’s master data.
A Board may appoint a director to serve as a director-at-large
An Ordinary Resolution can be passed by a company in order to remove a Director if the Director has not been appointed by the Central Government or the Tribunal.
- Directors will be notified seven days before a Board Meeting that the director will be removed. A special notice will be sent to the directors that includes the details of the removal.
- Board Meeting resolutions containing resolutions for the holding of an extraordinary general meeting and for the removal of directors will be passed on the day of the meeting.
- Members will be notified of a general meeting 21 days in advance. At the meeting, a vote will be taken by each member. If the majority is in favor of the resolution, it will go forward.
- Before the resolution is passed, the director will have an opportunity to be heard.
- The Board Resolution and Ordinary Resolution will be attached with the same forms DIR-11 and DIR-12, following the same procedure as following the passing of the resolution.
- On the Ministry of Corporate Affairs website, the director’s name will be removed after the forms have been filed.
Attendance at 3 consecutive meetings of the board is not possible
In accordance with section 167 of the removal of directors Companies Act 2013, if a Director does not attend
a board meeting for a period of 12 consecutive months, after giving due notice to the membership for every assembly, his office will be considered vacant and he will be relieved of office, and a Form DIR-12 will be filed on his name, and his name will be removed from the Ministry of Corporate Affairs.
