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How to Remove a Director from Company

Posted on June 6, 2022June 8, 2022 By admin No Comments on How to Remove a Director from Company
Director Removal

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 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.

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