Procedure for removal of a Director as per the Companies Act, 2013
GROUNDS FOR REMOVAL OF DIRECTOR :-
The removal of a director can occur under several circumstances, which may include:
- Incompetence or failure to perform duties: Directors who fail to meet their responsibilities and obligations under the Companies Act or the company’s articles of association can be removed.
- Violation of the law: A director convicted of a criminal offense or involved in fraudulent activity may be removed.
- Non-compliance with statutory requirements: Directors failing to comply with regulatory requirements, like filing mandatory disclosures or reports, may be subject to removal.
- Disqualification under Section 164 of the Companies Act, 2013: If a director becomes disqualified as per the Act, such as having an adverse relationship with the company or having been found guilty of certain offenses, their removal is
PROCEDURE FOR REMOVAL OF A DIRECTOR BY SHAREHOLDERS AS PER THE COMPANIES ACT, 2013:
Ever thought, how directors can get removed as under Companies Act, 2013? Read on to find out.
- A special notice under section 115 is required to be given to the company for removal of directors, at least 14 days before the date of meeting at which it is to be moved exclusive of the day on which notice is served and the day of meeting.
- Calling and convening the board meeting (BM) for taking note of Special Notice received from the shareholders of the Company and the company shall give notice of said resolution to the shareholders of the company.
- On receipt of notice of a resolution to remove a director, the company shall forthwith send a copy thereof along with a representation if any received from the director concerned and if a copy of the representation is not sent as aforesaid due to insufficient time or for the company’s default, the director shall be entitled to be heard on the resolution at the meeting.
- Sending the Intimation letter along with the copy of special notice dated to the concerned director being removed and intimate him about his entitlement of an opportunity of being heard in extraordinary general meeting.
- Calling and convening another board meeting and pass board resolutions for:
- Removal of Director subject to the approval of shareholders in Extraordinary General meeting (EGM) be way of ordinary resolution.
- Fixing day, date, time and venue for calling extraordinary general meeting and
- Approving notice calling EGM.
- Sending the notice of EGM to all the shareholders & directors of the company at-least 21 days before the date of EGM; and convene an Extraordinary General Meeting of the company on the decided date & time and pass necessary resolution for the Director’s Removal.
- Advice the Chairman that the resolution can be moved only if the person who has given notice of the resolution is present and moves the same at the meeting and that the director sought to be removed has got a right of being heard at the meeting even if he is not a member of the company.
- If the resolution is approved, inform the director concerned about that fact of his/her removal.
- File Form DIR 12 within 30 days of the removal of the director with the Registrar of Companies.
That was all that we had to share about the procedure for Removal of a Director as per The Companies Act, 2013.