Learn more about the various modes for removing the directors as mentioned here in depth.
When we talk about a corporation, we talk about significant people called the Company’s board of directors. These board members are responsible for running the business operations of the organization. Nevertheless, there are some instances in which the management of the Company decides for removing of the director owing to any form of negligence, a violation of privacy, or any other circumstance—criterion or standard to which a director was expected to adhere. Let’s go through the many director types and their other defining characteristics.
Who Are Directors?
A company’s board of directors member has been appointed per the Companies Act of 2013. In its most straightforward meaning, an employee is a natural person with particular skills and expertise that contribute to a firm’s expansion. The Board of Directors is the name given to the group that comprises all of these individual directors working together.
Is it possible for a firm to fire a director? To begin, we must have a firm grasp on the concept of the “removal of a director.” A situation that qualifies as removal of Directors is when the Board of Management of the Company decides to expel Directors from the Company.
Now, there are a significant number of reasons for taking such a step, and they differ from firm to Company; however, there is a process that must be followed to get rid of a director from a corporation; however, it is possible that a firm could fire any of its directors.
How Does The Dismissal Of A Director Take Place
Dismissing a director is outlined in Section 169 of the Companies Act of 2013. This clause must be complied with by the Company; failing to do so may result in the Company and its officers being penalized by the Companies Act of 2013.
What Would Not Warrant The Removal Of A Director?
There is, in fact, an exemption to the rule regarding the removal of directors; expressly, a business is not permitted to remove any of the following individuals from their positions as directors:
- A director selected by the Tribunal to serve in that capacity
- By the Companies Act of 2013, the Company has exercised its right to appoint not less than two-thirds of the total number of directors, following the principle of proportional representation.
What Are The Steps Involved In Dismissing A Director?
The following steps need to be taken for Different Modes of Removal of Director from their position:
- Draft the resolution(s) that will be voted on during the board meeting and the notice of the board meeting.
- The Company ought to inform the concerned Director that he would be removed from his position.
- Notice of the board meeting, together with its plan, is to be distributed to all of the Company’s directors.
- Call a board of directors meeting and have its vote on a resolution to consider removing the Director at issue, as well as send a notice of the meeting to the Company’s members.
- Sending of general meeting notice to all of the members at least 14 days before the date of the public meeting along with unique information to remove the specified number of directors of the Company gets passed at least prior to the 14 days before actually the meeting when the meeting gets held. This period does not include the day the notice is served or the day of the meeting.
- A notice (special) is required for giving to a company and should get signed, whether it could be collectively or individually, by various members which hold not lesser than 1% of the entire voting power or even the holding shares. On actually the aggregate of the sum for not more than 5 lakh rupees which gets paid as at the notice date.
- There are two criteria – and notice must meet one of these – 1) the member should hold 1 % at least of the voting power. 2) Members should hold shares, the amount paid up totally should not exceed 5.
- Documents to be prepared for the removal of the Director, as well as notifications to be sent to the relevant departments.
What Are The Necessary Steps Before Dismissing a Director From Their Position?
First and foremost, the Director in question must be provided with a reasonable opportunity to articulate why he should not be fired.
What kinds of Paperwork Are Required For Removing The Director From Their Position?
There are only two (2) forms necessary for the removal of the Director:
– E-form MGT-14 E-form DIR-12
Once a director has been removed from their position at a corporation, what post compliances are required?
Following the adoption of an ordinary resolution at a general meeting, the Company has a deadline of thirty (30) days to submit the previous papers to the Registrar, along with any applicable attachments. By the requirements outlined in the Companies Act of 2013, an appropriate entry must be made within the Company’s statutory registers within the relevant time frame.
What Should Be Done If The Company Does Not Comply With The Provisions?
Suppose a corporation is found to violate the requirements above. In that case, both the firm and any official of the company responsible for the offense will be subject to a fine, the amount of which will not be less than fifty thousand rupees but may go up to five lakh rupees.
Conclusion:
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