How to Remove the Director of a Private Company

by Enterslice ITES Pvt. Ltd. Start and Manage Business

A private company must have minimum 2 directors all the time according to the applicable rules and regulation of the Companies Act 2013.

A private company director is required to be removed in one of the following condition:

When director tenders his resignation.
In case the director has not attended the three consecutive Board meeting.
Board itself removes the director.

Now How to Remove a Director?

1. In case the director has tendered his resignation in writing to the board of directors of the Private Limited Company, in such case the company shall follow below given steps:

Serve a short notice to conduct a Board meeting.
Conduct the board meeting and the decision is required to be taken on acceptance or rejection of the resignation letter.
Once the resignation is accepted pass the resolution pursuant to applicable rules and regulation of companies act 2013. The resolution must state the acceptance and the effective date of resignation tendered.
After passing of the board resolution, the resigning director is required to file form DIR-11 with the ROC and attach the resignation letter and the proof of delivery of resignation letter. Note that DIR -11 is to be filed by the resigning director himself/herself, the company owes no duty to file the same.
The company is thereafter required to file DIR-12 with the ROC within 30 days of Board resolution being passed.

2. In case of the director has not attended the three consecutive Board meeting, in such case the company shall follow below given steps:

This situation is dealt with under section 167 of the Companies Act 2013.

According to the section 167 of the Companies Act 2013 if a Director does not attend a Board Meeting for 12 months even after giving proper notice, then the director needs to vacate his office.

The resigning director is required to file form DIR-11 with the ROC and attach the resignation letter and the proof of delivery of resignation letter. Note that DIR -11 is to be filed by the resigning director himself/herself, the company owes no duty to file the same.
The company is thereafter required to file DIR-12 with the ROC within 30 days of Board resolution being passed.

3. In case board wishes to remove the director in such case the company shall follow below given steps:

The procedure for removal of such director is given under section 169 of the Companies act 2013 which states that the shareholders can remove the director by passing an ordinary resolution in a general meeting.

The shareholders are firstly required to intimate the board of their intention to remove such director, basis the notice so received, the board shall conduct an extraordinary meeting and put it for voting for a resolution to be passed.
According to section 115 of Company Act 2013, a special notice of intention of removing a director by the members of the company has to be passed at least before 14 days before the concerned meeting at which it has to move.
Note the special notice given to the company shall be signed, either individually or collectively by a such number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not more than five lakh rupees has been paid upon the date of the notice.
• Conduct the board meeting and pass a resolution stating the date, time, venue to hold an Extraordinary meeting and resolution pertaining to the removal of the director. However such removal is subject to the approval of the shareholder, hence same should be stated in the board resolution passed for the removal of such director.
• Serve a clear 21 days notice to members, shareholders of the company.
• Conduct a general meeting and initiate the voting, in case of the majority votes in favor of the decision, the resolution is passed.
• Form DIR -11 is to be filed by the resigning director himself/herself, the company owes no duty to file the same.
• The company is thereafter required to file DIR-12 with the ROC within 30 days of Board resolution being passed.
• Note that before the passing of the resolution, an opportunity of being heard will be given to the director.
• Once the form is accepted by the ROC, the name of the director shall be removed from the MCA portal.

Note that in case it is not possible to serve 7 days notice to the shareholder, the company can advertise the same in the newspaper.

Source By: https://uberant.com/article/429754-how-to-remove-the-director-of-a-private-company/