Removal / Resignation of Directors
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Learn more about Removal of Directors
Removal of Directors
Efficiently navigate director removal in your private limited company or any organization with our expert solutions. Our streamlined processes ensure a seamless transition, whether you’re focused on the removal of a director in a private limited company or any other type of organization. Rely on our unique and dependable expertise for director removal services tailored to your needs. Removal of directors from a company before his/her tenure is a simple process and it is done by passing an ordinary resolution in the General Meeting. On the other hand, the director of a company may also wish to resign from the board voluntarily.
The director may resign or be removed in following three scenarios:
- Removal of directors by the shareholders in general meeting
- Voluntary Resignation of a director.
- Any director who doesn’t attend three board meetings continuously should also vacate office u/s 167
Procedure
Scenario 1: Removal of Director by Shareholders in a General Meeting
A director of the company, except a director appointed by Tribunal u/s 242 and a director appointed under principle of proportional representation u/s 163, may be removed before the expiry of his term by the Shareholders. The company must follow the below-mentioned steps:
- Step 1 – Send Special Notice to the Company
Shareholder/s holding not less than 1% of total voting power or holding shares on which an aggregate sum of not less than Rs. 5,00,000 has been paid up as on the date of notice, can send special notice to the Company for removal of director. The same should be signed by the concerned shareholders.
- Step 2 – Conduct Board Meeting and call EGM
A meeting of the board should be conducted within 7 days from the date of receipt of notice from shareholder. The board after considering the notice, should call for a general meeting.
- Step 3 – Right to be heard
On receipt of notice of a resolution to remove a director, the company shall forthwith send a copy thereof to the director concerned, and the director, shall be entitled to be heard on the resolution at the meeting. The concerned director may request to send his representations along with the notice to the members.
- Step 4 – Convening General Meeting of shareholders
After providing a 21-day clear notice, a meeting of shareholders is held. The director may be removed by passing an ordinary resolution.
- Step 5 – Company to file Form DIR-12
The director is required to file DIR-11 whereas it is the company should file the Form DIR-12 with the Registrar of Companies (RoC) along with the Registration letter and the Board Resolution.
- Step 6 – MCA master data updated
When all the forms are filled and the formalities for removal of the director are done, the name of the Director, who has resigned, will be removed from the master data of the company in the Ministry of Company Affairs (MCA) website.
Scenario 2: Voluntary Resignation of a director
A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar vide Form DIR-12. The company must follow the below-mentioned steps:
- Step 1 – Conduct Board Meeting
- The company should provide a seven days’ notice to hold a board meeting. It is to be noted that the notice period would exclude the day on which the notice is sent and received.
- In the board meeting, the board members would decide whether to accept the resignation submitted by the director or not. The board members will discuss among themselves and will also hear from the concerned director before reaching a proper decision. A Board resolution on accepting the resignation will be passed.
- Step 2 – Resigning Director to file Form DIR-11
After the resolution is passed, form DIR-11 needs to be filed by the director who will be relieved from his/her directorship post. Along with Form DIR-11, the Board Resolution, Proof of delivery of the resignation letter and copy of the resignation letter will be attached.
- Step 3 – Company to file Form DIR-12
The director is required to file DIR-11 whereas the company should file the Form DIR-12 with the Registrar of Companies (RoC) along with the Registration letter and the Board Resolution.
- Step 4 – MCA master data updated
When all the forms are filled and the formalities for removal of the director are done, the name of the Director, who has resigned, will be removed from the master data of the company in the Ministry of Company Affairs (MCA) website.
Scenario 3: Vacation of office of director by not attend ending board meeting (Section 167):
The office of a director will become vacant if the director absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board. Necessary steps will then be taken as per section 167 of the Companies Act, 2013 for his removal for the directorship of the company including filing Form DIR-12 with the registrar.
Timelines and next steps
It takes 15 – 20 working days to remove a director by shareholders and file DIR-12. However, if a director resigns voluntarily, it will take 3-5 working days to complete the documentation and file DIR-12. ExpertPoint speeds up the process with accurate details so that the changes are documented and intimated to ROC at their first approach.