Remove a Director

Description

What is the procedure for the removal of a director?
Let us look at the procedure for removal of a director in three different circumstances:

Removal of a director by shareholders

Notice of Meeting: A notice is sent to all the shareholders for a board meeting, required to be conducted within a period of seven days from the date of issue.
Passing of Resolution: A resolution is passed to have a general meeting, and then for the removal of the director, subject to the approval of the shareholders on the day of the meeting.
Another meeting: After providing a 21-day notice, the second meeting of shareholders is held to vote on the resolution passed earlier, to move forward with it or not.
A chance to be heard: The director who is being removed by the shareholders will be given an opportunity to speak on his/her removal.
Form DIR-11 & DIR-12: The shareholders must file Form DIR-11 and Form DIR-12, along with the attachments of the Board Resolution, and an ordinary resolution.
Removal of name: Once all the formalities are over, the name of the concerned director is removed from the Ministry of Corporate Affairs (MCA) database and its website
There are several steps through which the removal process can take place:

A notice should be sent to all the directors to hold a board meeting within seven days. Additionally, all the directors of the organization will receive a notice informing them about the removal of the director.
Followed by the notice and on the board meeting, a resolution will be passed for holding the extraordinary general meeting. Along with it, the resolution for the removal of the director will also be passed. This resolution will be subject to the approval of the shareholders on the day when the board meeting will be held.
There would again be a general meeting after providing 21 days to serve notice to the members. The meeting is conducted for the members of the board to vote for the particular resolution taken by the company for the removal of directors in company law. The decision will be made based on the majority of the votes. If the majority of the votes are in favor of the resolution, the same will be passed accordingly.
But, before the resolution is passed, the director for whom the resolution is passed will be given an opportunity of being heard.
Once the resolution is passed, the concerned director and the company must file two forms namely: Form DIR-11 and Form DIR-12 respectively. And, the two firms will be accompanied by copies of the Board Resolution and the ordinary resolution.
Once all the formalities are over, and the form has been filed, the name of the concerned director will be removed from the Ministry of Corporate Affairs (MCA) database and subsequently from the MCA website as well.

Removal of the director when he submits the Resignation by himself

Sometimes, a director of the company, for any reason, may wish to resign from the post he holds. In such a scenario, the company must follow the below-mentioned steps to complete the process of removal of directors in company law.

Firstly, the company will have to provide seven days’ notice to hold a board meeting. The notice period would exclude the day on which the notice is sent and received.
In the board meeting, the board members would decide whether to accept the resignation submitted by the director or not. The board members will discuss among themselves and will also hear from the concerned director before reaching a proper decision.
Once they decide to accept the resignation of the director, the further process will take place. A Board resolution on accepting the resignation will be passed in the following format: “RESOLVED THAT the resignation of the (Director Name) and is hereby accepted with an immediate effect”.
“FURTHER RESOLVED THAT the Board places on record its appreciation for the assistance and guidance provided by Mr./Ms (Director Name) during his tenure as Director of the Company”.

“RESOLVED FURTHER THAT”

directors of the company are hereby jointly authorized to do all the acts, deeds, and things which are necessary to the resignation of the aforesaid person from the directorship of the Company”.

After the resolution is passed, form DIR-11 needs to be filed by the director who will be relieved from his/her directorship post. Along with Form DIR-11, the Board Resolution, Proof of delivery of the resignation letter and copy of the resignation letter will be attached.
The director is accountable for the filing of DIR-11 whereas it is the responsibility of the company to file the Form DIR-12 with the Registrar of Companies (RoC) along with the Registration letter and the Board Resolution.
When all the forms are filled and the formalities for removal of the director are done, the name of the Director, who wants to resign, will be removed from the master data of the company in the Ministry of Company Affairs (MCA) website.

If the director remains absent in 3 Consecutive Board Meetings in a year

If a director remains absent from the Board meetings of the company on 3 consecutive occasions in 12 months (a year), then the absenteeism has to be taken seriously. The duration is calculated from the day on which he/she was not available from the first meeting and to any of the meetings, even after sending him/her due notice for all the meetings. It will be considered that he/she has abandoned the office. Necessary steps will then be taken as per section 167 of the Companies Act, 2013 for his removal for the directorship of the company.
A Form (DIR-12) must be filed on the missing director’s name.
Upon completion of the formalities, the concerned director’s name will be removed from the database of the Ministry of Corporate Affairs (MCA).