Removal of Director

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Overview on Removal of Director

Updated on December 31, 2022 04:39:28 PM

Each private company must have at least two directors, while a public company must have at least three directors. A private company can remove a director if they meet any of the disqualifications specified under the Act, are absent from board meetings for over 12 months, engage in agreements or arrangements contrary to the provisions of section 184, or are disqualified by order of a court or Tribunal or convicted of a crime and sentenced to imprisonment for not less than six months.

Regarding Participation in the Removal of a Director:
Shareholders holding shares with a total value of not less than Rs 5,00,000 as paid-up capital or holding not less than 1% of the total voting power can send a special notice to the company for the removal of a director.

Shareholders have the authority to determine the date of the meeting. However, the special notice must not be sent earlier than three months before the meeting date, and the resolution must be moved at least 14 clear days before the meeting.

The director in question has the option to be heard at the meeting before the board of directors. If the resolutions are approved by the shareholders and the board of directors, they can dispense with the procedure for the removal of the director after due consideration.

What is the Eligibility Criteria to be a Director?

There are no designated qualifications, but an individual should comply with the following mentors be a director:However, according to the law, a specific natural person only can be a director of any company.

Age Demarcation

There is no alternate fixed age for being a director, but it is essential that the person who should be competent to enter into any contract. Moreover, in a matter of 'managing director,' 'full-time' director, or 'independent' director of a recognized company, the person becomes eligible to be a director if he is of 21 years and has not reached the age of 70 years officially.

Determination Of Nationality

There is no restriction. However, there must be a minimum of one Indian director in the company.

DIN Needed

To be eligible to be designated as a company's director, the person must get a Director Identification Number. The main intention behind having a DIN is to make assured that fake directors do no fraud, and in case anyone ventures any such criminal activity, they can be traced within this unique number.

Limit Of Valid Directorship

A personality can only be a director of 20 separate companies at a time. Out of these 20 companies, only ten can be public companies.

Documents needed for Removal of Director

Photograph: Passport size photo of the Director to be designated
PAN Card: Self-attested PAN card of the Director to be designated
Proof of Residency: Aadhar Card/ Voter ID/ Passport/ Driving License
Digital Signature Certificate: DSC of the ongoing Director and Director to be eliminated/removed
Identity proof before-mentioned as Passport/Election card/Driving License/Aadhar card
Mobile number and Personal & official email id of the Director
It is mandatory to apostle all the documents apostilled if the Director is a non-resident of India.
Notice of resignation filed with the company
Proof of dispatch
Acknowledgment of form, if received.

Manner of Removal of Directors Effecting Companies

To remove a director from a company, certain conditions must be met, such as not abiding by the rules of the Companies Act, 2013, or voluntarily resigning or failing to attend board meetings for three consecutive times in a year.

Incident 1 – Removal by the Board:
Shareholders have the power to remove a director under Section 169 of the Companies Act, 2013, through an ordinary resolution in a general meeting, except when the Director was appointed by the Central Government or the Tribunal.

A notice must be sent to all directors to convene a board meeting with a notice period of seven days. All directors must be informed about the proposed removal of the director.

Subsequently, a resolution will be passed to convene the general meeting. The decision to remove the director will be put to the shareholders for approval on the day of the board meeting.

A general meeting will be held within 21 days of the notice to the directors. The decision will be based on a majority vote.

The director in question will have the opportunity to be heard.

After passing the resolution, the Director must file Form DIR-11 and Form DIR-12 with attachments of the Board Resolution.