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Removal Of Directors

1850* Basic Package

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Overview

The directors are in charge of the management and the functioning of the company. And the directors are appointed by the company through the general meeting. There are different types of directs in a company like the managing director, executive director, non-executive director, nominee director, and independent director.

Every director has their own set of exclusive roles that they play in different ways. Hence as the roles of the different types of directors are different in the same, the grounds for the resigning of the directors could be different. Some of the popular and common reasons for the director’s resignation are disagreement with the board, better career options, irregularities in the company affairs, and much more.

Companies Act provides for the removal of the director

The procedure for the resignation of the director is mentioned under Section 168 of the Companies Act 2013. If the directors are willing to resign from their post, then the first thing they need to do is give written notice to the company. And within thirty days, the companies’ boards are required to intimate the ROC of such notice.

The intimation of the notice to ROC is done through filling the form DIR-12. The resigning directors may also if he or she wants to resign then send a copy of the resignation letter to the ROC. The copy of resignation must also contain the form DIR-11 with the reason for the resignation. 

The steps that needed to be taken by the company on receiving the Director's resignation letter

When the company receives the notice's receipt, in this case, the company is required to pass the board resolution. And the company must also file the Form DIR-12 for intimating the ROC with the reason for the notice within the period of thirty days. Upon receiving the resignation letter, the company and the chairman of the board must note the resignation letter. And after noting the resignation letter, the company must send the letter to the resigning director in order to provide the confirmation that the company has received the letter.

After informing about the directors resigning to the ROC, the company may place the resignation of the director before the board. After the formal process of providing information about the director's resignation, the company must record in the minutes of the meeting.

Resigning director liabilities after the resignation

After the resignation process is accepted by the company boards, the resigning director cannot be held liable for any of the company's liabilities. If the company has incurred any of the liabilities after the acceptance of the letter of resignation by the resigning director, then the company is liable, not the resigning director. But the resigning director is liable for any of the offenses which have been incurred during his tenure as the companies director.

So the company could hold liable the resigning director for any offenses committed before the acceptance of his resignation. Director opting for resignation after the fraud, in this case, the personal assets of the director are frozen as the directors know the affairs of the company. Hence if found guilty, the director could also be held liable after resignation.

Reasons for the removal of the director

There are many reasons associated with the process of removal of the director of the company, like in case of any disqualification, the directors could be removed. As per sec 164 of the companies act 2013, if a director is absent from the board meeting for twelve months, the company could remove the director from his position as a director. Also, in case a companies director enters into a contract or an arrangement against the provision of sec 184 of the companies act 2013, the director could be removed from his position.

An effective process for the removal of the director of the company

The removal of the director could be done in two situations, and one is through the company or in case the director does not attain the three board meetings in a row. When the director does not attain the three meetings in a row, then it is considered that the director needs to vacant the office as the absence of the director could be considered as the director has left. And in this case, the form DIR 2 is filled, and the name of the director is removed from the MCA website.

Company procedure for removal of the director

1) When the company decides to remove the director from his seat at that time, the first thing that the company needs to do is to send a notice to the director informing him about his removal period seven days.

2) Then the company needs to organize an extraordinary general meeting for passing a resolution for the approval of the shareholders in the process of removal of the director.

3) By providing the seven days clear notice, the board members are required to hold a board meeting, and the notice has to be issued within twenty-one days by the company. This twenty-one day will not include the day of sending and receiving the notice.

4) The purpose of the board meeting is to take the decision related to the removal of the director.

5) The director will also be provided a chance to present something in his favor before the board's final verdict is passed.

6) After passing the resolution for the removal of the director, the company needs to fill the two forms that are DIR-11 and DIR-12.

7) And finally, after the process of the removal of the director, the concerned director's name is removed from the MCA (Ministry of Corporate Affairs). This process is the final process in the removal of the director of the company.

Conclusion

Which director needed to be removed, this decision completely lies on the company itself, but the company needs to follow the removal process as per the Companies Act 2013. And the cost of applying the procedure of removal could be born by the company if the director issues an order and demands the company to cover the cost.  

Document Required

  • Board Resolution
  • Special Resolution
  • Resignation letter from Director

Time Lines

  • (1 to 5 Days)
  • Purchase the Service
  • Upload / send the Documents
  • Discussion with expert
  • Filing of application with registrar authorities
  • Receipt of Registration Certificate
  • Confirmation to client

Service Covered

Pricing for what you want required service

Basic

1850*
  • Expert Consultation
  • Filing of Form for resignation of one director

Business

3750*
  • Expert Consultation
  • Filing of Form for removal of one director with consent

Enterprise

4950*
  • Expert Consultation
  • Filing of Form for removal of one director without consent
  • Notes:
  • * This price is inclusive of all Govt filing fee and excluding GST amount.

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