Question 1

How can a director of a company be removed?

Accepted Answer

A director can be removed in three ways:

By the director by giving their resignation
If the director is absent from board meetings for 12 months
By the shareholders, if they deem it necessary.

Question 2

Can you remove a company director without their consent?

Accepted Answer

Yes, a company director can be removed without their consent. However, such removal calls for a strict procedure to be followed.

Question 3

What is the minimum number of directors a company should have?

Accepted Answer

The minimum number of directors required is based on the type of company. For a one-person company, it is 1, for a private company it is 2, and a public company needs to have at least 3 directors.

Question 4

Who can't be a director of a company?

Accepted Answer

A person cannot be appointed as a director if they don’t qualify under the AoA, if they are undischarged bankrupt, or if they are restricted by a court order.

Question 5

What is the maximum number of directors in a company?

Accepted Answer

A private company can have a maximum of 15 directors.

Question 6

Is the process with Vakilsearch completely online?

Accepted Answer

Yes, the process is 100% online, we will take care of the physical actions to be performed. We will provide you with a dashboard on which you can comfortably do everything.

Question 7

Can someone with a criminal record be a director?

Accepted Answer

Yes, a person with a criminal record can be a director of a company, as long as they are not restricted specifically by a court order.

Question 8

How do you remove a director?

Accepted Answer

Removing a director from a company in India, as per the Companies Act, 2013, can be done through two main approaches:

1. Ordinary Resolution by Shareholders:

A majority of shareholders holding voting rights can pass a resolution at a General Meeting removing the director.

This requires special notice to the company and the targeted director, followed by due process as defined in the Act.

2. Court Order:

Shareholders or company stakeholders can petition the court for director removal based on specific grounds like breach of duty, misconduct, incapacity, etc.

The court will then decide based on presented evidence and legal framework.

Question 9

What are the reasons for director removal?

Accepted Answer

The Companies Act outlines various situations justifying director removal:

Failure to comply with provisions of the Act or company regulations.

Negligence, default, breach of duty, or lack of good faith.

Loss of qualification for directorship.

Conviction of certain offenses.

Insolvency or incapacity to perform duties.

Absence from Board meetings for a specified period.

Other grounds specified in the company's Articles of Association.

Question 10

What is the case law for removal of directors?

Accepted Answer

The case law for removal of directors in India is vast and complex, encompassing various aspects of the process and different grounds for removal. Here's a summary of some key cases, categorized by their focus:

Due Process and Fair Hearing:

State Bank of India v. Prem Nath (1996): This landmark case established the fundamental principle that directors have the right to a fair hearing before being removed. It emphasized the importance of providing the director with adequate notice of the proposed removal, a clear statement of the allegations against them, and an opportunity to present their defense.

Tata Consultancy Services Ltd. v. Cyrus Investments (P) Ltd. (2021): This case reaffirmed the importance of following due process before removing a director, even if the company is facing financial difficulties. It held that the National Company Law Tribunal (NCLT) cannot order the reinstatement of a director removed without proper adherence to legal procedures.

Grounds for Removal:

P.K. Gupta v. State Bank of India (2006): This case established that directors can be removed for failing to perform their duties diligently and honestly. It highlighted the importance of upholding fiduciary duties and acting in the best interests of the company.

Vijay Kumar Goyal v. State Bank of India (2007): This case recognized the right of shareholders to remove directors based on loss of confidence, even without specific proof of misconduct. It emphasized the importance of shareholder trust and the ability to hold directors accountable for their performance.

Shapoorji Pallonji and Co. Ltd. v. ICICI Bank Ltd. (2019): This case dealt with the removal of directors appointed by minority shareholders. It clarified that the removal process for such directors must also comply with the principles of due process and fair hearing.

Specific Situations:

In re: Hindustan Construction Co. Ltd. (2002): This case addressed the removal of a director due to disqualification under the Companies Act. It held that the disqualification itself does not automatically lead to removal; the company must still follow the established procedures for removal.

Ajay Piramal vs. Mukesh Ambani (2016): This case dealt with the removal of a director appointed by a subsidiary company. It clarified that the removal process for such directors should be conducted as per the bylaws of the subsidiary company, not the parent company.

Question 11

How do I remove directors Companies Act, 2013 case laws?

Accepted Answer

Consulting expert legal advice is crucial for navigating director removal. Your lawyer can:

Assess the specific grounds for removal in your case.

Determine the appropriate method (shareholder resolution or court order).

Guide you through the legal process, including notice requirements, documentation, and representation.

Refer to relevant case law precedents to strengthen your case.

Removal of Director as per Companies Act 2013

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