The Procedure for
Removal of a Director
As per Section 169 of the Companies Act of 2013, by passing an ordinary resolution the shareholders can remove a director from their position before the end of their term of office However, the director must be given a reasonable opportunity to be heard before such any action against him.
CA on Web will walk you through the procedure for the removal of a director, shedding light on various aspects related to this process.
Whether you're a director looking to resign or a company seeking to remove a director, this information is vital for you.
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Section 1: Resignation of a Director
Procedure of Resignation of Director:
| 1 | Step 1: Notification | The director willing to resign must submit a resignation letter to the company's board of directors. |
| 2 | Step 2: Board Meeting | A board meeting should be convened to discuss and accept the resignation, typically following the provisions of the Articles of Association. |
| 3 | Step 3: Filing with Registrar of Companies (ROC) | After accepting the resignation, the company must file relevant forms with the ROC to ensure compliance with legal procedures. |
Director Resignation Letter:
A director's resignation letter should be formal, specifying the date of resignation, reasons for resignation, and a statement of the director's fulfilment of any obligations. A sample resignation letter is available on our website, which can be a helpful template.
Section 2: Removal of a Director
| 1 | Step 1: Board Resolution: | The board may pass a resolution to remove a director if they believe it's in the company's best interest. This should be done in accordance with the provisions of the Companies Act. |
| 2 | Step 2: | Shareholder Approval: Depending on the company's Articles of Association, shareholder approval may be required for the removal of a director. This is typically needed when the director in question was appointed by the shareholders. |
| 3 | Step 3:Filing with ROC | Just like in the case of resignation, the removal of a director should be reported to the ROC |
Section 3: Expert Insights from CA Sanket Agarwal
Industry expert CA Sanket Agarwal, provides insights on the removal of a director:
"In the realm of corporate governance, the removal or resignation of a director is regarded as a significant matter. It is imperative to adhere to the prescribed legal procedures with precision to mitigate the risk of disputes. Companies should consistently engage legal counsel to guarantee adherence to the Companies Act and their Articles of Association."
Frequently Asked Questions
Resignation is a voluntary act by a director, while removal is often initiated by the company or its shareholders.
Yes, a director can be removed without their consent if the legal procedures are followed.
You'll need the board resolution for removal and any documents required by the ROC, depending on the specific case.
From the date of his resignation, within a period of 30 days the director resigning from his office shall forward to the Registrar, a copy of his resignation along with reasons for the resignation in Form DIR-11 with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.
To inform the Registrar of Companies (ROC) about the resignation of a director, you need to submit Form No. DIR-11. This action is in accordance with the provision stated in Section 168(1) of The Companies Act, 2013 and Rule 16 of The Companies (Appointment and Qualification of Directors) Rules, 2014.
Notice of Change/ appointment/Resignation of directors and other officials to the Registrar of Companies is given by filing Form DIR - 12 on the official portal of MCA.
Conclusion
The resignation or removal of a director is a crucial process that should be approached with caution and diligence. Whether you're a director seeking to resign, or a company looking to remove a director, understanding the legal procedures, and seeking expert advice, such as that from CA Sanket Agarwal, is crucial. For a smooth transition, always prioritize compliance with company law. Noida-based CA Services and Tax Consultant firm CAonWeb is here to help you through this process, ensuring that you navigate it successfully.
Contact Noida-based Tax consultant and CA Services provider firm Caonweb today, for expert advice and support on the resignation or removal of directors. Your company's future is in your hands, and we are here to guide you every step of the way.