Vacation Of Office Of Director Under Companies Act 2013 (Section 167)

Vacation of Office of Director

This section applies to both private and public companies. The office of a director is considered vacant in the following cases:

a) If the Director is Disqualified:

If the director of a company is disqualified as per section 164 of the Companies Act 2013, then he would have to vacate the office of the director. Therefore, you have to vacate the office of the director if any of the provisions of section 164 applies to you.

b) Absent in Board Meetings:

If the director of the company remains absent in all the Board meetings held within 12 months with or without seeking a leave of absence he needs to vacate the office of director. Such 12 months is not a calendar or accounting or a financial or previous year or any other year. The period of 12 months is counted from the date of his first absence in BM.

It states that if the director has a casual approach and he is not serious about his position then he should vacate the office as a director. This is because he thinks that there is no relevance in attending even one meeting held in a year i.e. within 12 months.

However, the fact is that this provision hardly affects the position of the director because nowadays the BM can also be attended to through video conferencing or other audiovisual means in addition to physically present as provided in section 173(2) of the Companies Act 2013.

c) Not obeying Section 184:

If the director of the company contravenes the provisions of section 184 about entering into contracts or agreements in which he is directly or indirectly benefited, then he would've to vacate the office as director.

Interested director means any director enters into by or on behalf of a company with anybody or group who is in any means has a connection, whether by himself or through his relatives or any other body as a partner, director or a member.

d) Disclosure:

The director of the company should've to vacate the office if he couldn't disclose his interest in any contract or arrangement in which he is directly or indirectly benefited or interested, which is in contravention of the provisions of section 184.

e) Disqualification :

If the director of the company is disqualified by an order of a court or the Tribunal, he would've to vacate office immediately.

f) Punishment:

A director of the company if convicted by a court of any offense, involving moral turpitude or otherwise is sentenced to imprisonment for a minimum of 6 months.

g) Office can be Continued:

The office can be continued by the director if:

1. For a maximum of 30 days from the order of the disqualification or date of conviction;

2. Seven days from the disposal of appeal filed within 30 days of the order; and

3. Seven days from the disposal of the appeal further filed against order or sentence.

h) Removal:

If the director of the company is removed from his position in pursuance of the clauses of the Companies Act, 2013.

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