Directors are the individuals who promote the success of a company and provide benefits to the shareholders of the company. The shareholders of the company elect the director for managing the affairs of the company as per the provision stated under Companies Act, 2013. If the director fails to execute the plans as per the expectation of the shareholders, or if the director him/herself wants to quit from the post of the director for a personal reason or the director fails to attend board meetings. In that case, the shareholders can remove the director under the provisions stated under section 169 of the Companies Act 2013. In this article, we have discussed the course of action for Removal of Director under the Companies Act's provisions, 2013.
What are the Necessary Documents for Removal of Director?
The following are the required documents for removal of director:
Passport size photographs of the director.
A copy of the directors’ PAN card.
Proof of residency, such as Passport, Voter ID card, Aadhar card, or driving license.
DSC of the new director appointed and director who is to be eliminated or removed.
Identity proof such as Passport, Voter ID card, Aadhar card, or driving license.
Official and personal E-mail address along with directors’ mobile number.
It is requisite to the apostle the documents If the director is not the resident of India.
Dispatch proof.
Notice of Resignation filed with the company.
Removal of Director via Suo-Moto by the Board
As per the provisions stated under section 169 of the Companies Act, 2013, the shareholders of the company have the authority to eliminate a director. The Removal of Director can be done in general meeting by passing a resolution, but the directors appointed under the provision of section 242 by the central government or the Tribunal cannot be removed in the general meeting.
A notice should be mailed to the directors to conduct a board meeting by giving a weeks’ time. In addition, all directors of the company will be provided detailed information concerning the director's removal.
Stated in the notice, a resolution will be permitted for conducting a general meeting.
The general meeting will be conducted after three weeks of the defined declaration to the directors. The decision of removing a director is taken on the basis of the majority of votes.
In the first segment of the general meeting, the director will be offered an opportunity of being heard.
After the declaration of the resolution, the director has to file Form DIR- 11 and Form DIR- 12, and the resolution of the board will be attached to the forms.
After submitting Form DIR- 11 and Form DIR- 12, the concerned director's name will be removed from the official website of MCA and, consequently, from the database.
Removal of Director by Self-Submission
If the director of the company wants to quit from the post of director, he/she can go through it by passing a resolution to the company.
The Companies Act of 2013, states that the company has special responsibility and sense of duty to fulfil after the resignation from the director.
The first option is to passing a joint resolution by the company to sanction the letter resignation, and the commission will file Form DIR- 11 mentioning the reasons for the resignation, as per the provisions of section 168 (1) of the Companies Act of 2013.
The notice regarding resignation must be communicated to the ROC through Form DIR- 11, within 30 days of the removal of the director.
The following documents required to be submitted:
Removal of Director in case of absence in three Annual Board Meetings
If the director of the company has not attended a board meeting for twelve months, then the absence of the director from the meetings must be taken seriously. The extent of absence is measured from the first meeting which the director does not attend. The concerned director will be sent notices for the meetings he/she has not attended. A notification will be passed in which it will be stated that the director has abandoned the office, and steps will be taken as per section 167 of the Companies Act of 2013. A Form DIR- 12 will be applied in the name of the concerned director. Moreover, the provisions of the Companies Act will be followed; the directors’ name will be removed from the official website of the MCA and from the database too.
Provisional Aspects for the Removal of Director under Companies Act, 2013
Following are the provisional aspects for removing a director as per the provisions of Companies Act, 2013:
Section 169(1)
A general resolution is required;
Director appointed by Tribunal as per section 242 should not be removed;
Reappointed Independent Director should be removed by a 'Special Resolution'.
Section 169(2)
A special notice is required for a resolution to appoint someone else in the position of the director or to remove a director.
Section 169(3)
The Company must attempt to send the Special notice with the purpose of removal to the Director and offering an opportunity of being heard at the meeting.
Section 169(4)
For representation, Director to give in writing to the Company to notify the members.
If the Tribunal is pleased, the company should not assign the representation and must not read it out at the meeting.
Section 169(5)
The vacancy can be filled by the same meeting if 'special notice' is provided as per 'section 169(2)'.
Rule 79 of National Company Law Tribunal Rules 2016
The Company who claims to be hard done by can appeal to the Tribunal through Form 'NCLT-1'.
Checklist
File Form DIR-12 within a period of '30 days' from the date of General Meeting with below-mentioned attachments:
Special Notice where the Shareholders proposed to remove the Director.
General Meetings notice with clarifying Statement.
Copy of ordinary Resolution passed at EGM.
Notice sent to Director concerned.
Conclusion
If the director fails to execute the plans as per the expectation of the shareholders, or if the director him/herself wants to quit from the post of the director for a personal reason or the director fails to attend board meetings. In that case, the shareholders can commence the procedure for removal of a director under the provisions stated under section 169 of the Companies Act 2013.