Procedure for Removal of Director – Legal Steps

procedure-for-removal-of-director

procedure for removal of director

Streamlined Procedure for the Removal of Directors in India

Introduction

In India, the removal of a director from a company’s board is a process that must be undertaken following certain intricate legal procedures. This article aims to enlighten Indian readers about the step-by-step procedure involved in the removal of a director from a company, ensuring compliance with the Companies Act, 2013 and the regulations set forth by the Ministry of Corporate Affairs.

1. Conduct a Board Meeting

The process of removal commences with a properly convened board meeting, where the matter of director removal is placed on the agenda. A notice specifying the removal proposal and the reasons for it must be sent to the director in question, along with the supporting documentation. It is essential to provide the director with adequate time to respond to the allegations made against them.

2. Convene a General Meeting

Following the board meeting, a general meeting should be scheduled as per the provisions of the Articles of Association and the Companies Act. Written notice of at least 21 days must be given to all shareholders, along with an explanatory statement outlining the reasons for the proposed director’s removal.

3. Shareholder Approval

During the general meeting, shareholders will vote on the resolution for the director’s removal. A special notice is required to be submitted to the company at least 14 days in advance of the meeting, along with the statement of further representation received from the director. The resolution needs to obtain the support of shareholders holding at least a 75% majority of votes.

4. Filing with Registrar of Companies (RoC)

Once the resolution is passed by the shareholders, it should be communicated to the Registrar of Companies within 30 days through the appropriate forms. These forms, including Form DIR-12, contain information such as the director’s details, the company’s resolutions, and any relevant attachments. Failing to file within the stipulated timeframe can result in penalties and legal consequences.

5. Informing the Director

After the completion of filing with the RoC, the director in question must be provided with a copy of the resolution and the relevant forms filed with the RoC. This step ensures that the director is informed of their removal and is granted the opportunity to take necessary legal actions, if desired.

Conclusion

The removal of a director from a company’s board is an essential process that must be undertaken with utmost care and adherence to legal procedures. By following the steps outlined in this article, companies in India can effectively navigate this complex process in a seamless manner. It is crucial for companies and directors to ensure compliance with the Companies Act, 2013, and related regulations while conducting such proceedings. Ultimately, the objective is to maintain transparency, safeguard the company’s interests, and uphold corporate governance standards in the Indian business landscape.,
procedure-for-removal-of-director

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procedure for removal of director

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procedure for removal of director

This article is only published for informational purposes. Please consult your Chartered Accountant or Financial Advisor before making any important financial decisions.
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Procedure for Removal of Director – Legal Steps

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Procedure for Removal of Director – Legal Steps