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Solution
It is possible to add or remove a director from the company at any time.
There are different reasons why a director is removed and there are three different procedures based on the reason. Irrespective of that, Vakilsearch can help you with removing a director from your company and make the whole process easy for you.
A director can be removed for any of the following reasons:
If they incur any of the disqualifications specified under the Companies Act
If they absent themselves from board meetings over 12 months
If they enter into contracts or arrangements against the provisions of Section 184 of the Companies Act
If they are disqualified by an order of a court or tribunal
If they are convicted by a court of any offence and sentenced to imprisonment for not less than six months
If they have not abided by the terms and protocols mentioned in the Companies Act of 2013
If they have resigned voluntarily from their position.
The steps to be followed in this scenario are:
Step 1: Holding a board meeting by giving seven days of clear notice
Step 2: In the meeting, the board members will take note of the resignation
Step 3: Then they have to pass a resolution in a particular format to that effect
Step 4: After that, Form DIR-11 needs to be filed by the resigning director in his individual capacity
Step 5: The company has to file Form DIR-12 with the registrar of companies (RoC) along with the registration letter and the board resolution
Step 6: When all the forms are filled and the formalities for the Removal of Directot are done, the name of the director will be removed from the master data of the company on the Ministry of Corporate Affairs (MCA) website.
Step 1: If a director absents himself from all the meetings of the removal of board of directors held over a period of twelve months, with or without seeking leave of absence from the board, they are considered to have vacated their office as per Section 167
Step 2: A Form (DIR-12) must be filed
Step 3: Upon completion of the formalities, the concerned director’s name will be removed from the database of the Ministry of Corporate Affairs (MCA).
Step 1: A notice is sent to all the shareholders for a board meeting required to be conducted within seven days from the date of the issue
Step 2: Step 2: A resolution is passed to have a general meeting and then for the director removal, subject to the approval of the shareholders on the day of the meeting
Step 3: After providing a 21-day notice, the second meeting of shareholders is held to vote on the resolution passed earlier and who is being removed as the director by shareholders will be allowed to speak on their removal
Step 4: The shareholders must file Form DIR-12, along with the attachments of the board resolution, and an ordinary resolution
Step 5: Once all the formalities are over, the name of the concerned director is removed from the database of the Ministry of Corporate Affairs (MCA) and its website. This is the simplified version of the whole process.The removal of director procedure has to be carried out carefully and should follow the procedure laid down in the Companies Act.
Our team at Vakilsearch will walk you through the entire process and will be there to help you at every step.
DIR-12 has to be filed within 30 days from the date of resignation. If the company fails to do so, the following penalties will apply:
After 30 days - within 60 days: twice the government fees
After 60 days - within 90 days: 4 times the government fees
If it exceeds 90 days: 10 times the government fees
If it exceeds 180 days: 12 times the government fees and will be booked for the compounding offence as well
The following documents are needed for removal of director
Notice of Board Meeting: The first step in the removal of a director is to hold a board meeting and pass a resolution for the removal of the director. A notice of the board meeting must be sent to all the directors of the company, and the resolution must be passed with a majority vote
Special Notice to Director: A special notice must be sent to the director who is being removed. This notice should contain the reasons for the removal of the director, along with a copy of the board resolution
Resignation Letter: If the director being removed wishes to resign voluntarily, a resignation letter should be obtained and filed with the MCA
Form DIR-12: Form DIR-12 is the form used to file the details of the removal of the director with the MCA. This form must be filed within 30 days of the removal of the director
Board Resolution: Certified resolution passed in favour of the director removal should be prepared and file directly with the MCA
Declaration by Director: A declaration must be obtained from the director being removed stating that they have no objection to the removal.
To be eligible to be a director in a company in India, an individual must meet the following eligibility criteria:
The individual must be at least 18 years of age
The individual must have a valid DIN issued by the MCA. If the individual does not have a DIN, they can apply for it online
The individual must not be disqualified under the Companies Act, 2013. This means that the individual must not have been declared bankrupt, convicted of an offense, or disqualified by a court or tribunal
The individual must give their consent by filing Form DIR-2 with the MCA
The individual must be appointed with an appointment letter and must be filed with the MCA in Form DIR-12
Resignation: A director can also resign voluntarily by filing a resignation letter with the company and the MCA.
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