In accordance with the Companies Act, 2013, a private limited company must have at least two directors before it can commence operations. Unless the central government has appointed a director, shareholders can vote out for the removal of a director at a company’s General Meeting.
When a director of a company is removed:
- A director could be disqualified under the Act if he/she commits an act that disqualifies him/her
- Over 12 months of absence from Board meetings
- Resignation of the director on a voluntary basis
- Disqualified by the court/tribunal
- A contract is entered into in contravention of section 184
- Obtains a conviction under charges and is sentenced to no less than six months in prison
Removing oneself from office in the case of self-resignation
- In order to convene a Board meeting, a 7-day notice will be provided, excluding the day of sending and receiving the notice.
- Following discussions and hearing out the points put forth by the concerned director, the Board will either accept or reject the resignation.
- When the resignation is accepted, the Board will issue the following resolution: RESOLVED THAT the resignation of the director be accepted without delay. FURTHER RESOLVED the Board places on record its appreciation for the assistance and guidance provided by the director during his tenure as Director of the removal of director in private limited company
A FURTHER RESOLVED that the directors of the company shall be and are hereby jointly authorized to do all acts, deeds, and things relating to the resignation of an aforementioned person from its board of directors.
- As soon as the Board passes the resolution, the concerned director needs to fill out the form DIR-11 in addition to submitting a copy of the letter of resignation, along with a proof of delivery of the letter of resignation.
- Company officials are responsible for filing form DIR-12 with the Registrar and sending the resignation letter of the outgoing director along with it.
- A director’s name will be removed from MCA’s web-based master data after all formalities are completed.
Removing someone when they do not attend 3 consecutive board meetings in a row
Under section 167 of the ACT, 2013, it is considered abandoned if a director fails to attend the Board Meeting for a period of twelve months, starting from the day on which he/she was absent at the first meeting, even after being sent due notice for all meetings.
A form DIR – 12 must be completed by the company and the formalities followed for removing the credentials of the director from MCA’s records must be followed.
The board’s process for removing Director
In the ACT, section 169 describes the procedure.
- Board meetings should be called with seven days’ notice provided for all directors. Additionally, a special notice advising the directors of the directors’ removal should be provided.
- An extraordinary general meeting will be called and a resolution for the removal of the director will be presented to the Board of Directors on the day of the meeting.
- A second meeting shall be held with a 21-day notice. In this meeting, the members would vote on the matter. If the majority votes in favor of the resolution, the resolution will be adopted.
- A majority vote will pass the resolution if the majority votes in favor of it in the meeting.
- The same procedure needs to be followed after the resolution has been passed, and the forms DIR-11 and DIR-12 need to be filed with the same attachments that were attached to the Board Resolution and Ordinary Resolution.
- A scratch-off will be made on the Ministry of Corporate Affairs website once the form is submitted.