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Removal of Director Under the Companies Act 2013

Q: Can shareholders remove any director they want?

Shareholders can remove most directors by passing an ordinary resolution. However, they cannot remove a director who was appointed by the National Company Law Tribunal (NCLT). Also, a director appointed through proportional representation to protect minority interests cannot be removed this way. These exceptions are in place to ensure fairness and protect the company from instability.

Q: What is a special notice for the removal of a director?

A special notice is a formal request sent by shareholders to the company. It states their intention to propose a resolution for removing a director at a general meeting. This notice must be signed by shareholders holding at least 1% of the total voting power or shares worth at least five lakh rupees. It is the first official step in the removal process.

Q: What happens if a director misses board meetings for a year?

If a director is absent from all board meetings for a continuous period of 12 months, their office becomes automatically vacant. This is not considered a removal by shareholders but a vacation of office under Section 167 of the Companies Act. The company’s board will pass a resolution to note this vacancy and then file Form DIR-12 with the Registrar of Companies (ROC).

Q: How can a director resign from a company?

A director can resign by giving a written notice to the company. After the board accepts it, the company must file Form DIR-12 with the ROC within 30 days. The resigning director can also file a separate form, DIR-11, with the ROC. This form includes the reasons for their resignation and confirms their departure from the board.

Q: What is Form DIR-12 used for in director removal, and what are the consequences of not filing it on time?

Form DIR-12 is a crucial document filed with the Registrar of Companies (ROC) to report a director's removal, resignation, or appointment. This form must be submitted within 30 days to officially update the government's records on the Board of Directors. Failing to file it on time can lead to significant penalties, including daily late fees, which can quickly become expensive. Delays also result in non-compliance, potentially damaging the company’s reputation and leading to legal complications for its officers. Filing Form DIR-12 on time is not only a mandatory legal requirement but also vital for maintaining the company’s legal standing.

Q: Can a director be removed without being given a chance to speak?

No, a director cannot be removed without being heard. The Companies Act, 2013, mandates that the director must be given a reasonable opportunity to present their side. They can provide a written statement and also have the right to speak at the shareholder meeting where the resolution for their removal is being discussed. This ensures the principles of natural justice are followed.

Q: How is a nominee director removed?

A nominee director is appointed by a financial institution or a bank to protect its interests. The removal process for such a director is straightforward. The appointing institution can remove them at any time by simply giving notice to the company. The shareholders of the company do not have the power to vote for the removal of a nominee director.

Q: What is the role of the NCLT in removing a director?

The National Company Law Tribunal (NCLT) can remove a director in serious cases. If a director is found guilty of fraudulent activities, oppression, or mismanagement, the NCLT can order their removal. A director removed by the NCLT is disqualified from being appointed as a director in any company for five years, highlighting the severity of such an order.

Q: What are the main reasons for removing a director?

A director can be removed for various reasons. These include poor performance, misconduct, or a conflict of interest that harms the company. Other grounds are a breach of duties, continuous absence from board meetings, or any action that goes against the company's best interests. The shareholders usually decide if the reason is strong enough for removal.

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Frequently Asked Questions (FAQs)

What is the main law for removing a director in India?

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The primary law governing the removal of a director is the Companies Act, 2013. Specifically, Section 169 of the Act provides the procedure for removal by shareholders. Other sections like Section 167 (for automatic vacation of office) and Section 168 (for resignation) also apply. These rules ensure the process is fair and legally sound for everyone involved in the company's management.

Can shareholders remove any director they want?

What is a special notice for the removal of a director?

What happens if a director misses board meetings for a year?

How can a director resign from a company?

What is Form DIR-12 used for in director removal, and what are the consequences of not filing it on time?

Can a director be removed without being given a chance to speak?

How is a nominee director removed?

What is the role of the NCLT in removing a director?

What are the main reasons for removing a director?

What is an ordinary resolution for director removal?

Is there a fee for removing a director?

Can a removed director claim compensation?

What are the key documents needed to remove a director?

Why Choose RegisterKaro for Director Removal Services?

Navigating the rules for removing a director can be tricky. The process needs careful attention to detail. We make this process simple and hassle-free for you.

Expert Guidance: Our team of experts knows the Companies Act inside out. We guide you through every step, ensuring everything is done correctly.
Error-Free Documentation: We prepare all the necessary documents for you. This includes resolutions, notices, and ROC forms. This helps avoid any mistakes that could cause delays.
Timely Filing: We understand the importance of deadlines. Our team ensures that all forms, like DIR-12, are filed with the ROC on time. This helps you avoid heavy penalties.
Transparent Process: We keep you informed at every stage. You will always know the status of your request.
Affordable Services: Our services are priced to be affordable. We offer transparent and competitive pricing.

Why Choose RegisterKaro for Director Removal Services?

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