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Often, we have seen when a director of a company is removed from his office then it has negative repercussions on the performance of company, both in its operations and stock market (if listed). In this section, we will try to learn about removal of Director and how can you save your company from it.
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The removal of Directors is governed by Section 169 of the Companies Act of 2013 (formerly Section 284 of the Companies Act of 1956). A company may, by ordinary resolution, remove a Director who is not a Director appointed by the Tribunal under segment 242, before the expiry of period of his office after giving him a reasonable opportunity of being heard.
If the director has fallen into bankruptcy
If the director has been found guilty and sentenced to at least six months in prison by a court of law.
If a judge has ruled that the director is mentally ill.
If the Director has been deemed ineligible to hold such a position by the Tribunal or Court
If the director has resigned voluntarily.
The appointed Director is not attending the Board Meeting for more than 12 months in a row
Regarding inability to follow the Companies Act of 2013's rules
Under Section 169(4), a Director has the right to make a written representation against his removal. Also, he can request the company to inform the members of the company by sending them a copy of the representation. In case the copy of the representation wasn’t sent on time it was received late or because the company failed to send it, the Director may demand that the representation be read out at the gathering
If Tribunal agrees that the company or any other individual was distressed due to abuse of rights by director to secure needless publicity for slanderous matter; then the Tribunal might order the director to bear the entire or in part company’s cost of the application in entire or to a limited extent by the Director. (Notified on 01-06-2016)
ID PROOF (PAN and Aadhar card) of the director
Address Proof of the director
DSC of the director
Copy of Board Resolution or Special Resolution as required
Resignation letter or Relieving letter
Proof of Dispatch of letter
Acknowledgement of letter
*In case of NRI or Foreign National all document of director should be notarized or Apostilled.
The process for removing a Director typically involves calling a meeting of shareholders, putting forward a resolution for the removal of the Director, and getting the resolution passed. The specific process may vary depending on the laws of the jurisdiction in which the company is incorporated and the company's articles of association or bylaws.
Grounds for removing a Director may include misconduct, poor performance, violation of laws or regulations, non-attendance of meetings, or a conflict of interest.
Yes, a Director can be removed by the Board of Directors, but the decision must be ratified by the shareholders at the next general meeting.
Yes, a Director can be removed by shareholders, typically by passing a resolution at a general meeting.
The notice period for removing a Director may vary depending on the laws of the jurisdiction in which the company is incorporated and the company's articles of association or bylaws. Generally, a notice should be given to the Director and shareholders before the removal process.
Yes, a removed Director can be re-appointed, subject to the approval of the shareholders and compliance with the applicable laws and regulations.
Whether a removed Director can retain their shares in the company will depend on the terms of the company's articles of association or bylaws and any agreements between the Director and the company.
Yes, the process of removing a Director must be done in accordance with the laws of the jurisdiction in which the company is incorporated and the company's articles of association or bylaws. It is recommended to seek legal advice to ensure compliance with the legal requirements.