Directors are an integral part of any company. They are responsible for the management and administration of the company. However, sometimes the need arises to remove a director due to various reasons such as misconduct, non-performance, or conflicts of interest. In such cases, the process of removal of directors needs to be carried out in accordance with the law. Legal Provisions for Removal of Directors The Companies Act, 2013 lays down the provisions for the removal of directors. According to Section 169 of the Act, a director can be removed by an ordinary resolution passed by the shareholders of the company after giving special notice to the director concerned. The notice must be sent at least 14 days before the meeting at which the resolution is to be moved. Moreover, The director concerned is entitled to be heard at the meeting. Grounds for Removal of Directors The grounds for the removal of directors are mentioned in Section 167 of the Companies Act, 2013. Some of the grounds for removal are: Process of Removal of Directors The process of removal of directors involves the following steps: Expert Guide to Forced Exit of Directors in Chennai Rajendra Law Office Chennai Rajendra Law Office is a well-known law firm that provides expert guidance on the removal of directors. Of course, The firm has a team of experienced Corporate lawyers who are well-versed in the legal provisions and procedures for the removal of directors. The firm provides the following services: Legal Advice Firstly, The […]
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In India, a private limited company is a popular business structure due to its advantages such as limited liability, perpetual succession, and ease of raising funds. However, there may come a time when a director needs to be removed from the company due to various reasons such as misconduct, non-performance, or violation of company policies. In this article, we will discuss how to remove a director from a private limited company in India.
Grounds for Removal of a Director
Before we delve into the process of removing a director, it is essential to understand the grounds for removal. The following are some of the reasons for which a director can be removed:
- Non-performance or failure to discharge duties
- Misconduct or fraud
- Conflict of interest
- Breach of confidentiality
- Violation of the company’s policies
- Disqualification under the Companies Act, 2013
Procedure for Removal of a Director
The procedure for removing a director from a private limited company is outlined in the Companies Act, 2013. The process involves the following steps:
Step 1: Convene a Board Meeting
The first step is to convene a board meeting to discuss the removal of the director. The notice of the meeting should be sent to all the directors at least seven days before the scheduled date. During the meeting, the board must pass a resolution approving the removal of the director.
Step 2: Issue a Notice to the Director
After the board meeting, a notice should be issued to the director stating the reason for their removal and the date of the general meeting where the shareholders will vote on the matter. The notice should be sent at least 14 days before the general meeting.
Step 3: Convene a General Meeting
The next step is to convene a general meeting where the shareholders will vote on the removal of the director. The notice of the meeting should be sent to all the shareholders at least 21 days before the scheduled date. During the meeting, the shareholders will vote on the resolution to remove the director.
Step 4: File the Required Forms
After the general meeting, the company must file the necessary forms with the Registrar of Companies within 30 days of the removal of the director. The forms include Form DIR-12 and Form DIR-11.
Conclusion
Removing a director from a private limited company can be a complex process that requires careful consideration and adherence to the provisions of the Companies Act, 2013. It is essential to ensure that the removal is carried out in accordance with the law to avoid any legal implications. If you are considering removing a director from your company, it is advisable to seek the guidance of a legal professional to ensure that the process is smooth and hassle-free.
