Procedure for Removal of Director Under Companies Act- 2013

Posted In Company Law | Articles | 1 Comment

CS Divesh Goyal

Power to remove directors has always been bestowed on shareholders, as we all know that at
the end of the day, directors are answerable to shareholders. Nothing has changed in the procedural
aspect under Companies Act, 2013 as well. Shareholders can remove any director before the expiry of his
tenure, except any director appointed by Tribunal for prevention of oppression and mismanagement u/s
242 and a director appointed under principle of proportional representation u/s 163.
Right to Remove a Director is Legal Right of Share Holders:
Section 169 and Chapter 7 of Companies Act, 2013 Right of Shareholders to remove a director in the
General Meeting through Ordinary Resolution is a Legal Right. This legal right cannot be damaged or
taken away by MOA, AOA or any other documents or Agreement.
Section 169 and Chapter 7 details the procedure of removal of director by shareholders as follows: A company MAY, by ordinary resolution, remove a director,
Not being a director appointed by the Tribunal under section 242, before the expiry of the period of his
office after giving him a reasonable opportunity of being heard.
The provision relating to removal shall not apply where the company has availed itself of the option to
appoint not less than two thirds of the total number of directors according to the principle of proportional
representation.
A special notice shall be required of any resolution, to remove a director, or to appoint somebody in place
of a director so removed.
As per Section- 115 of Companies Act, 2013:o
Special notice to Company-There is a criteria, who can send the notice to the Company. Only

shareholder/s holding not less than 1% of total voting power or holding shares on which an aggregate
sum of not less than Rs. 5,00,000 has been paid up as on the date of notice, can send special notice
to the Company for removal of director. The same should be signed by the concerned shareholder/s.
Date of meeting-Shareholders have the right to decide the date of meeting. However, the special
notice shall not be sent earlier than three months from the date of meeting but at least 14 clear days
before the date of the meeting, at which the resolution is to be moved.

On receipt of notice of a resolution to remove a director, the company shall immediately send a copy
thereof to the director concerned, and the director, whether or not he is a member of the company, shall
be entitled to be heard on the resolution at the meeting.
Intimation to Director- the Company shall forthwith send a copy of the notice to the concerned director.
Reasonable Opportunity of being heard- The director concerned may make representation in writing to
the company and requests its notification to members of the company. The Director may request to send
his representations along with the notice to the members and to be heard at the meeting. However, the
rights may not be available, if on the application either of the Company or of any other person who claims
to be aggrieved.

Intimation by Company to all shareholders:

1. The company shall, if the time permits it to do so;
(a) Company shall take immediate steps to send the notice to its members, at least 7 clear days before
the meeting. The notice has to be sent in the same manner as in case of any other general meeting of the
Company; and
(b) Send a copy of the representation to every member of the company to whom notice of the meeting is
sent.
2. The company shall, if the time not permits it to do so;
Notice shall be published in English language in English newspaper and in vernacular language in a
vernacular newspaper, both having wide circulation in the State where the registered office of the
Company is situated. At the same time, the notice shall also be posted on the website, (if any). However,
it shall be published at least 7 clear days before the meeting.
The copy of the representation need not be sent out and the representation need not be read out at the
meeting if, on the application either of the company or of any other person who claims to be aggrieved,
The Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure needless
publicity for defamatory matter; and the Tribunal may order the companys costs on the application to be
paid in whole or in part by the director inspite of that he is not a party to it.
***Members may pass remove the director by passing ordinary resolution.
Appointment of director in place of removed director- A vacancy created by the removal of a director
under this section may, if he had been appointed by the company in general meeting or by the Board, be
filled by the appointment of another director in his place at the meeting at which he is removed, provided
special notice of the intended appointment has been given. A director so appointed shall hold office till the
date up to which his predecessor would have held office if he had not been removed. If the vacancy is not
filled, it may be filled as a casual vacancy. The director who was removed from office shall not be reappointed as a director by the Board of Directors.
File Form- DIR-12 within 30 days of passing of resolution for appointment of Director.
Some Important Judgment come under Section- 284 of Companies Act,1956 (Corresponding of
Section-169 of Companies Act, 2013):
Khetan Industries Private Limited Vs. Manju Ravindra Prasad Khet
111111111111111111111111111111111111111111111111111111111111111111111111111111111111

Removal of directors.
1. A company may, by ordinary resolution, remove a director, not being a director appointed by the
Tribunal under section 242, before the expiry of the period of his office after giving him a
reasonable opportunity of being heard:
Provided that nothing contained in this sub-section shall apply where the company has availed itself of the
option given to it under section 163 to appoint not less than two thirds of the total number of directors
according to the principle of proportional representation.

2. A special notice shall be required of any resolution, to remove a director under this section, or to
appoint somebody in place of a director so removed, at the meeting at which he is removed.
3. On receipt of notice of a resolution to remove a director under this section, the company shall
forthwith send a copy thereof to the director concerned, and the director, whether or not he is a
member of the company, shall be entitled to be heard on the resolution at the meeting.
4. Where notice has been given of a resolution to remove a director under this section and the
director concerned makes with respect thereto representation in writing to the company and
requests its notification to members of the company, the company shall, if the time permits it to do
so,
a. in any notice of the resolution given to members of the company, state the fact of the
representation having been made; and
b. send a copy of the representation to every member of the company to whom notice of the
meeting is sent (whether before or after receipt of the representation by the company), and if
a copy of the representation is not sent as aforesaid due to insufficient time or for the
companys default, the director may without prejudice to his right to be heard orally require
that the representation shall be read out at the meeting:
Provided that copy of the representation need not be sent out and the representation need not be read
out at the meeting if, on the application either of the company or of any other person who claims to be
aggrieved, the Tribunal is satisfied that the rights conferred by this sub-section are being abused to
secure needless publicity for defamatory matter; and the Tribunal may order the companys costs on the
application to be paid in whole or in part by the director notwithstanding that he is not a party to it.
5. A vacancy created by the removal of a director under this section may, if he had been appointed
by the company in general meeting or by the Board, be filled by the appointment of another
director in his place at the meeting at which he is removed, provided special notice of the
intended appointment has been given under sub-section (2).
6. A director so appointed shall hold office till the date up to which his predecessor would have held
office if he had not been removed.
7. If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy in
accordance with the provisions of this Act:
Provided that the director who was removed from office shall not be re-appointed as a director by the
Board of Directors.
8. Nothing in this section shall be taken
a. as depriving a person removed under this section of any compensation or damages payable
to him in respect of the termination of his appointment as director as per the terms of contract
or terms of his appointment as director, or of any other appointment terminating with that as
director; or
b. as derogating from any power to remove a director under other provisions of this Act.

111111111111111111111111111111111111111111111111111111111111111111
11111111111111111
Power to remove directors have always been bestowed on shareholders, as we all know, that at the
end of the day, directors are answerable to shareholders. Nothing has changed in the
procedural aspect under Companies Act, 2013 as well. Shareholders can remove any director before the
expiry of his tenure, except any director appointed by Tribunal for prevention of oppression and
mismanagement u/s 242 and a director appointed under principle of proportional representation u/s 163.

Section 115, 169 and Chapter 7 details the procedure of removal of director by shareholders as follows:
Special notice to Company-There is a criteria on who can send the notice to the Company. Only

shareholder/s holding not less than 1% of total voting power or holding shares on which an aggregate
sum of not less than Rs. 5,00,000 has been paid up as on the date of notice, can send special notice to
the Company for removal of director. The same should be signed by the concerned shareholder/s.
Date of meeting- Aforementioned shareholders have the right to decide the date of meeting.

However, the special notice shall be sent not earlier than three months but at least 14 clear days before
the date of the meeting, at which the resolution is to be moved.
Intimation to Director- The Company shall forthwith send a copy of the notice to the concerned
director.

Reasonable Opportunity of being heard- The Director may request to send his representations

along with the notice to the members and to be heard at the meeting. However, the rights may not be
available, if on the application either of the Company or of any other person who claims to be aggrieved,
the Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure needless
publicity.
Intimation by Company to all shareholders- Company shall take immediate steps to send the

notice to its members, at least 7 clear days before the meeting. The notice has to be sent in the same
manner as in case of any other general meeting of the Company.
Publication in Newspapers- If it is not practicable to give the notice as aforementioned, then

notice shall be published in English language in English newspaper and in vernacular language in a
vernacular newspaper, both having wide circulation in the State where the registered office of the
Company is situated. At the same time, the notice shall also be posted on the website, (if any). However,
it shall be published at least 7 clear days before the meeting.
Convening of General Meeting Members may pass remove the director by passing ordinary

resolution.
Appointment of director in place of removed director- The shareholder/s may recommend

appointment of any other director in place of removed director through special notice. Such a director can
only hold office till the tenure of removed director.
Casual Vacancy- If a new director is not appointed as aforementioned, then Board may fill the

position through casual vacancy, however the removed director shall not be re-appointed as a director by
Board.
Vacation of Office- When a director is removed as aforementioned, his office vacates
automatically u/s 167.
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11111111111111111111111111111111111111111111111111111111111111111111111

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STANDARD VIEW
FULL VIEW
OF 25
1

122

Indian Companies
Act - Directors
Ratings: (1)|Views: 14,102|Likes: 145
Published by Sanjog Devrukhkar
By Sanjog Devrukhkar ()
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INTRO
DUCTI

ON
TO A
COMP

ANY
&INDI
AN

COMP
ANIES

ACT,
1956

MANA
GEME
NT OF

A
COMP
ANYM

ANAG
EMEN
T OF

A
COMP
ANY
6

A
company
functions
through
the

medium
of Board
of
Directors.
A

company
functions
through
the
medium

of Board
of
Directors.
However,
certain

powers
have been
reserved
to be
exercised

byHoweve
r, certain
powers
have been
reserved

to be
exercised
byshareho
lders in
general

body
meetings.
Section
291 of
theshareh

olders in
general
body
meetings.
Section

291 of
theCompa
nies Act,
1956
confers

general
power on
the Board
of Compa
nies Act,

1956
confers
general
power on
the Board

of Directo
rs. It
provides:
Subject
to the

provisions
of the Act,
the
BoardDire
ctors. It

provides:
Subject
to the
provisions
of the Act,

the
Boardof
Directors
of a
company

shall be
entitled to
exercise
all suchof
Directors

of a
company
shall be
entitled to
exercise

all
suchpowe
rs, and to
do all
such acts

and
things, as
the
company
ispowers,

and to do
all such
acts and
things, as
the

company
isauthoriz
ed to
exercise
and

do.authori
zed to
exercise
and do.

DIRECT
ORSDI
RECTO
RS

The
company
carries on
its
business

through
individual
s
calledThe
company

carries on
its
business
through
individual

s
calleddire
ctors.direc
tors.

Collectivel
y they are
called
Board of
DirectorsC

ollectively
they are
called
Board of
Directors

No body
corporate,
associatio
n or firm
can be

appointed
as a
director
of No
body

corporate,
associatio
n or firm
can be
appointed

as a
director
of a
company,
and only

an
individual
can be
appointed
a

company,
and only
an
individual

can be
appointed
7

CONSTI
TUTION
CONSTI
TUTION

Every
Public
Company
must
have at

leastEvery
Public
Company
must

have at
least
33

directors
directors

A Public
Company

having A
paid up
capital of
Rs. 5
crore or

more
andA
Public
Company
having A

paid up
capital of
Rs. 5
crore or
more

andOne
thousand
or more
sharehold
ers Can

elect a
director
by
smallOne
thousand

or more
sharehold
ers Can
elect a
director

by
smallshar
eholders.s
hareholde
rs.

A private
company
must
have at

leastA
private
company
must

have at
least
2
directors2
directors

Subscribe
rs of the
memoran
dum who
are

individual
s,
areSubscr
ibers of
the

memoran
dum who
are
individual
s,

aredeeme
d to be
the
directors
of the

company,
until the
directorsd
eemed to
be the

directors
of the
company,
until the
directorsa

re duly
appointed
in
accordan
ce with

the Act.ar
e duly
appointed
in
accordan

ce with
the Act.

Directors
are

appointed
in general
meeting,
in board
meeting,

by
centralDir
ectors are
appointed
in general

meeting,
in board
meeting,
by
centralgo

vernment,
by
proportion
al
represent

ation or a
person
can stand
for govern
ment, by

proportion
al
represent
ation or a
person

can stand
for directo
rship, if
eligible.dir

ectorship,
if eligible.
8

(Continued
)

A
company
can have
a
maximum

number
of A
company
can have
a

maximum
number
of
12
directors

12
directors
and toand
toincrease
this

number,
the
approval
of
Central G

overnmen
t is
required.i
ncrease
this

number,
the
approval
of
Central G

overnmen
t is
required.

The board
of
directors
can
appoint

Additional
Directors,
by
passing
aThe

board of
directors
can
appoint
Additional

Directors,
by
passing
aresolutio
n,

if such a
power exi
sts in the
articles.re
solution,

if such a
power exi
sts in the
articles.

If any
vacancy
arises in
office of
any

director
then
subject to
theIf any
vacancy

arises in
office of
any
director
then

subject to
thearticle
s, the
board of
directors

can fill the

vacancy
at a
meeting
of

thearticle
s, the
board of
directors
can fill the

vacancy
at a
meeting
of

theboard.
board.

One
single

resolution
can
appoint
one direct
or only

and two
or
more.One
single
resolution

can
appoint
one direct
or only

and two
or more.

A
company,

at a
general
meeting
may, by
ordinaryA

company,
at a
general
meeting
may, by

ordinaryr
esolution,
increase
or reduce
the

number
of its
directorsr
esolution,
increase

or reduce
the
number
of its
directors

within the
limits
fixed in
that
behalf

by its
articles.wi
thin the
limits
fixed in

that
behalf by
its
articles.
9

CONSTI
TUTION
CONSTI
TUTION

(
Continued)

10

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