REMOVE A DIRECTOR
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Remove a director in your company. We will complete the process following all the MCA formalities. Remove a director online in just 3 days.
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REMOVE A DIRECTOR
Only companies contain directors in their board and the company doesn’t include any Sole proprietorship, Partnership, LLP, etc. it means the company which is registered under Companies Act, 2013. Directors are an important part of the company for running the operation and for the growth of the company as the director takes the major decision for the development of the company. Therefore a better board of directors can give a better direction to the company for achieving its goals. The main focus of the directors in promoting the value of the company and give benefits to the shareholders of the company. So to maintain this the company can appoint or remove the director from its board. The resignation or removal of the director is the normal change for the company. The company can appoint any director anytime or can remove any director from his position for the smooth function of the company.
The company not only can remove the director but the director can itself gives his resignation and the shareholders can even remove the director. But the company has to maintain the minimum limit of the directors in the company. The minimum limit of the director in a Public company is 3, in a Private company is 2 and one person company is only 1. So the companies shall maintain this limit all the time during its life, if in any situation this limit falls then the company needs to maintain this limit within 6 months. There are different situations where a director can be removed from his position of directorship. Once the director of the company is removed from his position then the company needs to intimate the Registrar regarding such removal within 30 days from the date of the resolution passed for such removal.
Who Can Remove A Director
The director can be removed by the board of director on suo-moto or by the shareholders or by the government or a director can himself give his resignation from the director’s position. A director can be removed only in the meeting of the company. If any director is appointed by the Tribunal (NCLT) or Court then only the Tribunal or Court can remove that director from the company. Whenever the director is removed from the company, the company is responsible to intimate the Registrar of its jurisdiction regarding such removal.
WAYS TO REMOVE A DIRECTOR IN A COMPANY
NOT PRESENT IN BOARD MEETINGS
- If a director fails to attend consecutive 3 board meetings during 12 months in a year with or without leave of absence then as per section 167 of the companies act, 2013 it will be considered as that the director has vacated the office.
- The company has to file DIR-12 and intimate the Registrar for removal of such director due to absence from the meeting
- After filing of DIR-12 the registrar will remove the name of the director from its register and will update on the MCA database.
BY A SPECIAL NOTICE
A director appointed can be removed in the general meeting of the company by passing ordinary resolution except if the director is appointed by the either by the tribunal or he is appointed under section 163 of the companies act, 2013. A special notice is required for the removal of the director and the procedure is as follows:
- A board meeting shall be called by circulating seven days notice to all directors before the meeting
- In the Board meeting of the company, a board resolution shall be passed for the removal of the director along with calling of the general meeting
- A notice for calling the general meeting shall be circulated to all the shareholders and directors along with the notice for removal of the director at least 21 clear days before the meeting
- In the general meeting, the shareholders of the company will decide the removal of the director and if majority members make their decision in favor of removal of the director then the director has to vacate his position from the directorship of the company
- An opportunity of being heard shall be given to the director before passing any resolution for his removal in the meeting
- Once the resolution for removal of a director is passed the company has to file DIR-12 along with the copy of the resolution passed to the registrar for the intimation of such removal
- After receiving the form from the company the registrar will remove the name of the director from its register as well as from the MCA database and the registrar will update such change on its website.
BY DIRECTOR ITSELF
A director can resign itself from the position of the directorship of the company by giving his resignation letter to the board of directors of the company. A director can anytime gives his resignation there is no restriction on it but the resignation should be in written no oral resignation is acceptable. After receiving the resignation letter the process will be as follows:
- The director should send his resignation letter in writing to the board of directors of the company
- After receiving the resignation letter the company has to conduct the board meeting for passing the resolution for acceptance of the resignation. For holding the meeting the company has to circulate 7 days prior notice to all the director
- At the board meeting, the director will discuss the matter of resignation and they may accept the resignation of the director. After acceptance of the resignation, the board needs to pass a board resolution for such
- After passing board resolution for the removal of director the company needs to file the form DIR-12 for such resignation of the director along with the resignation letter and board resolution. The form will be signed by the existing director of the company by his DSC
- After receiving the form the registrar will remove his name from the directorship of the company and will update it on master data of the company on the MCA website.
Consequences For Not Filing DIR 12
After removal of the director, it is the responsibility of the company that it should file DIR-12 form along with the resolution passed for such removal and resignation letter if any within 30 days from the passing resolution. If a company fails to file the form during the specified period then there will be an additional fee leviable on the company:
|Period Delayed||Additional Fees|
Up to 30 days
2 times of actual fees
More than 30 days but up to 60 days
4 times of actual fees
More than 60 days but up to 90 days
6 times of actual fees
More than 90 days but up to 180 days
10 times of actual fees
More than 180 days
12 times of actual fees
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Removal Of Director Starting @ iNR 2999
Frequently Asked Questions
Only the shareholders of the company have the power to remove the director in the general meeting of the company except if the director is appointed by the tribunal and if the director is appointed as per section 163 of the companies act, 2013 Principle of Proportional Representation. But if a director wants he can also resign by himself as a director of the company.
Once the notice for removal of a director is received by the company it becomes the responsibility of the board of directors of the company to call a general meeting within 21 days from receipt of such notice. If the notice is already dispatched for calling general meeting then the director shall send this notice to every shareholder at least 7 days before the meeting and if it is not possible to send this notice to every shareholder then the board can publish this notice in two newspaper one english newspaper and second is the local newspaper and this publication shall also be at least 7 days before the meeting.
The time duration for removal depends upon the procedure for removal.
- If a director is resigning by himself then it can take 7-10 days for removal because it is necessary to conduct a board meeting for passing the board resolution for acceptance of the resignation of the director.
- If the director is removed by the board with the consent of the shareholders then it might take more than 21 days. For the removal of the director, a general meeting is necessary to call and for calling a general meeting notice is sent to all the shareholders at least 21 days before the meeting. Therefore, it can take more than 21 days.
But after the removal of a director, it is necessary to intimate the registrar regarding such removal within 30 days from passing the resolution for removal.
Yes, a director can be removed without his consent but such removal can be made only after the approval of shareholders in the general meeting of the company but before removing the director from his position an opportunity of being heard shall be provided to him. And if any director is disqualified as per section 164 of the companies act, 2013 any time then he shall be removed by the board of directors without his consent only an intimation for removal is sufficient and the same shall also be required to intimate to the registrar after removal along with the reason for removal.
A board can remove a director but after the approval of the shareholder by passing an ordinary resolution in the general meeting of the company. Apart from this if any director is appointed by the board of directors of the company during the year then the board can remove that director anytime without the consent of the shareholders of the company.
There are two options with the director after resigning from his position of directorship either he can take shares with himself or he can transfer his shares to any other person whether to any existing member or any outsider. It is not mandatory for the director of the company that he has to transfer his shares after ending of his tenure in the company as a director. As per the companies act, 2013 the shareholder and directorship are two different categories and it doesn’t make any difference in another category if he is no more interested in one category.
Although there is no need to transfer the shares held by the director of the company after resigning from his position because shareholding and directorship both are different as per the Companies Act, 2013. But if the director wants to transfer his shares then the process is as follows:
- The share transfer is completely a physical process where transferee and transferor need to be present physically for transferring the shares.
- Execute the share transfer deed SH-4 by signing both the parties i.e. transferor and transferee and the witness along with their name, and address
- The stamp duty shall be paid on such transfer of share as per the Stamp Act and rate of the stamp duty as per prescribed under the notification of State Stamp Rule
- The same shall be submitted to the company for its record along with the share certificate
- The company will approve the transfer and will record in its register and remove the name of the transferor (director) and will enter the name of the transferee as a new shareholder and will issue a new share certificate in the favor of transferee.
Whether directors of the Company are personally liable for non-compliance after strike off of Company?
Yes, a director is personally liable for non-compliance with the company because a company is an artificial person and the directors are the persons who run the company so it is their responsibility to complete all the compliance which is mandatory to do for a company. If a company fails to hold an annual general meeting and fails to file an annual report and financial statement for the continuous period of 3 years then the registrar will strike off the name of the company from its register along with that it will disqualify all the existing directors of the company from their directorship for 5 years. And during these 5 years, they cannot be the director of any other company.