A director of a company can be removed due to multiple reasons. Know about some of the people who have the right to remove a director from a company.
One can remove a director of their office either because of disqualification, non compliance with the rules and regulation or due to any situations resulting in vacating the office, resignation, or eviction. While the law, that is, the Companies Act, 2013 deals with the removal of directors, and the shareholder rights regarding the same. According to the conditions of Section 169 of the Companies Act, 2013 eviction of a director has to be conducted adhering to specific rules and regulations.
In this blog we’ll discuss who has the power to remove a director from a company. As a public rule, it is well known that the appointing commission shall have the ability to remove a director from such a department. However, the right of removal is not restricted to the shareholders alone.
Who has the Power to Remove a Director From a Company?
According to Section 115 only shareholders carrying not less than 1% of total voting strength or holding shares on which an aggregate sum of not less than ₹ 5,00,000 has power to remove a director and can deliver personal notice to the company for removal of a director. The same should be approved by the concerned shareholders. The shareholders of a firm may initiate a normal resolution:
- To eliminate the director of company
- To nominate somebody in the position of a director so removed
The person who has power to remove a director can terminate a director if he is not performing his duties properly or did not attend three board meetings in a row. As per Section 167 of Companies Act, 2013 the director should attend the board meetings and if he fails his name will be removed from the Ministry of corporate affairs. This can be done by the board of directors.
Steps to Remove a Director From a Company
Below given are the steps to be followed by the person who has power to remove a director from a company:
- According to the regulation of Section- 115 of Companies Act, 2013 the firm has to send a special notice regarding the intention to move a resolution for the removal of directors at the members’ meeting
- The company must intimate the director of the planned explanation by sending a document of the personal notice to them. The director shall have the freedom to express his point of view in the meeting
- The director, who is said to be removed, can make a petition in writing against his removal and give a petition to the company to instruct the company’s members. If the director requests the company to inform the partners of the firm about his petition against his removal and the presentation is of the acceptable extent and it has been collected not too late, the firm must
- Mention the name in the notice of the explanation to be shifted at the annual general conference, the validity of the representation having been collected
- Mail a document of the petition to every partner along with the notice of the conference if the representation has been earned before mailing the notice of the meeting or individually if the presentation has been earned after delivering the notice of the meeting
- Hold and assemble a general meeting & pass a resolution for the removal of the Director
- e Form no. DIR-12 has to be filed from the company’s end with the Registrar of Companies (ROC) within 30 days of enacting the resolution
- After the removal of the director, then in the same meeting the appointment of director should be finalised, and a special notice of the intention for an appointment is given
- The recently nominated director has to keep the post until the duration of the recent formal authorisation of the director is made
- When a director is eliminated as aforementioned, his office vacates automatically
- The eliminated director is responsible for the damages and any form of loss in the office. The amount will be detected from his Private Limited Company.
Manner of Execution
The Personal notice shall be approved either individually or by the total number of partners holding (as on the date of notice):
- Not more than 1% of total voting ability
- or percentages on which an aggregate quantity of minimum ₹ 5 lakh is paid up
The Personal notice shall be distributed to the partners in the same way as the report of public conferences is disclosed. If the circulation of notice as above is not possible, the particular notice shall be disclosed at least 7 days* before the meeting in:
- English language in English magazine
- and in vernacular language in a vernacular magazine
both retaining large circulation in the State where the registered office of the Company is located. Also, the notice shall be published on the Company’s website.
How Vakilsearch Can Support to Remove a Director
The removal of a director from a company is not an easy task however our experts in Vakilsearch can make it very simple. They will make sure all your queries are answered, initiate the process, and draft all the required documents for the removal and help you throughout the process. If you are looking for a simple and speedy process our experts will give you the same and provide you with the best support. Reach out right now to avoid any penalties raised due to noncompliance.
Read More:
