Overview

A Director in a company may want to resign or the Board of Directors may want to remove the Director for several reasons. The Director of a company can also resign from the Board by filing a resignation letter with the company and also intimating the ROC with the same. Here, we will take a look at the procedure that a director needs to follow in case he wants to resign from the post of Director.

After giving notice in writing to the Company a Director may resign from a company. The Board is required to intimate the ROC of this notice within 30 days in the form of DIR-12. If the Director chooses, he can also send a copy of the resignation letter to the ROC along with the reasons for the resignation using Form DIR-11. Here is the format for the resignation letter of a Director.

Remove Director From Your Company

Reasons for Director Removal From Company

Stated below are reasons for removal of director from a company :

• If they incur any of the disqualifications specified under the Companies Act
• If they absent themselves from board meetings over 12 months
• If they enter into contracts or arrangements against the provisions of Section 184 of the Companies Act
• If they are disqualified by an order of a court or tribunal
• If they are convicted by a court of any offence and sentenced to imprisonment for not less than six months
• If they have not abided by the terms and protocols mentioned in the Companies Act of 2013
• If they have resigned voluntarily from their position.

Ways to Remove a Director

There are 3 ways to remove a director from a company :

1. When the Directors Tender Their Resignation

• Step 1 : Holding a board meeting by giving seven days of clear notice
• Step 2 : In the meeting, the board members will take note of the resignation
• Step 3 : Then they have to pass a resolution in a particular format to that effect
• Step 4 : After that, Form DIR-11 needs to be filed by the resigning director in his individual capacity
• Step 5 : The company has to file Form DIR-12 with the registrar of companies (RoC) along with the registration letter and the board resolution
• Step 6 : When all the forms are filled and the formalities for the removal of the director are done, the name of the director will be removed from the master data of the company on the Ministry of Corporate Affairs (MCA) website

2. Director Remains Absent from the Board Meetings for 12 Months

• Step 1 : If a director absents himself from all the meetings of the board of directors held over a period of twelve months, with or without seeking leave of absence from the board, they are considered to have vacated their office as per Section 167
• Step 2 : A Form (DIR-12) must be filed
• Step 3 : Upon completion of the formalities, the concerned director's name will be removed from the database of the Ministry of Corporate Affairs (MCA)

3. Removal of Director by Shareholders

• Step 1 : A notice is sent to all the shareholders for a board meeting required to be conducted within seven days from the date of the issue
• Step 2 : A resolution is passed to have a general meeting and then for the removal of the director, subject to the approval of the shareholders on the day of the meeting
• Step 3 : After providing a 21-day notice, the second meeting of shareholders is held to vote on the resolution passed earlier and the director who is being removed by the shareholders will be allowed to speak on their removal
• Step 4 : The shareholders must file Form DIR-12, along with the attachments of the board resolution, and an ordinary resolution
• Step 5 : Once all the formalities are over, the name of the concerned director is removed from the database of the Ministry of Corporate Affairs (MCA) and its website

How to Remove Director from your company

A Company can remove its directors before the expiry of its term, these powers are vested with the shareholders. Here we will talk about the process of removing the Directors of a Company. In case of Non-compliance with any one of these processes can make the decision void, if appealed in a court.

• Basic Prerequisite
  This process of removing the Director cannot be initiated without providing an opportunity to the Director who is to be removed. This is one of the basic requisites on the laws ordained which provides the defendant or the defaulter an opportunity of being heard.
• Issuing Notice
  This process of removing Directors must be initiated by a notice. This notice should be processed by the shareholders that have a minimum voting power of 1% or someone who holds shares on which an aggregate sum of not more than Rs. 5,00,000 is paid upon the date of the notice. This is a special notice that should be signed by all the members. This special note should be delivered to the Company at least 14 days before the meeting is held at which resolution will be passed. The notice won't be valid if isn't issued before three months of the date of the meeting.
• Notice to Members
  The Director must be sent a copy of the Notice, who will be heard on the resolution at the meeting, whether the director is a member or not a member of the Company. The notice should be served at least seven days which is a week before the date of the meeting which is held. If the shareholders are not able to deliver the notice it can be published in any two newspapers, one in English and one in the vernacular newspaper. The notice must be mandatorily posted on the company's website again this should be done seven days before the date of the meeting.
• Representation in writing
  The concerned director can make a representation against this removal notice. The director can request the company to send the representation to all the members. Also, the members should be notified of the representation by a notice. In case the company is not able to all the members the director may request for reading of this representation.
• Appeal to the Tribunal
  An application can be made to the tribunal if the organization or any aggrieved person decides against sending out the representation to the members or reading it out in the meeting, to request to nullify the process. The tribunal can also annul the process if it finds that the Director uses this right for unnecessary publicity for defaming purposes. This director is also given the right to issue an order demanding the director to cover the cost of the application borne by the company.

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