Explore all the details you need about Removal of Director from a Company, tailored for your needs.
Directors play a pivotal role in overseeing the management and operations of a company, while shareholders are the owners. However, there are instances where shareholders may opt to remove a director, especially when there are concerns about performance or other issues. Directors may also choose to resign voluntarily. The process of removing a director is a significant decision that involves various legal requirements and steps. Whether initiated by an ordinary resolution, board resolution, or judicial order, this process must be carried out with fairness and transparency, always keeping the company's best interest in mind. It is essential to comply with the legal framework established by the Companies Act, 2013, or any applicable local laws, to ensure the validity of the process and avoid potential legal challenges.
Solocorp specializes in guiding businesses through the director removal or resignation process. We ensure that every step is in strict compliance with the legal standards set forth by the Companies Act, 2013, making the process smooth and hassle-free. Our team of experts provides detailed assistance in drafting resolutions, obtaining the necessary consents, and filing documents with the Registrar of Companies (ROC). Whether you're dealing with the removal of a director due to performance issues or a resignation, Solocorp handles the paperwork, ensuring a seamless transition and protecting your company from any potential legal complications. By choosing Solocorp, you can trust that your business is in expert hands, and we will help you navigate this critical corporate transition with the utmost care and professionalism.
A director may be removed if they are disqualified according to the criteria outlined in the Companies Act, 2013.
Directors who fail to attend board meetings for more than a year may be removed by the shareholders.
Directors engaging in prohibited transactions as per Section 184 of the Companies Act can face removal.
A director can be removed if prohibited from participating due to a court or tribunal order.
A director convicted of a criminal offence with a sentence of at least six months is subject to removal.
Failure to comply with the regulations and requirements under the Companies Act, 2013 can lead to director removal.
A director may choose to voluntarily resign from the board, leading to their removal.
There are three primary methods to remove a director from a company.
Removing a director is governed by the Companies Act, 2013, under Section 169.
This part explains how a company can legally remove a director, detailing the steps and rules that need to be followed.
While this section mainly talks about how to add new directors, knowing it helps to fully understand the rules about directors, including how they might be removed.
This section deals with choosing directors so everyone gets a fair representation. It's essential for removing directors because it affects how decisions are made in the company.
This rule gives specific guidelines on how a company should be run, including how to remove directors properly.
To lawfully remove a director, specific critical steps must be followed:
Form DIR-12, mandated by the Companies Act 2013, must be filled out and submitted to document the official removal of a director.
This form is a crucial part of the legal procedure for removing a director from their office.
The procedure for removing a director from a company involves several steps, which are outlined below.
A director's resignation becomes effective on the date the company receives the notice or on a later date specified by the director in the notice, whichever comes later. Even after stepping down, a resigned director remains accountable for any offences committed during their term.
Forms to be used: Form DIR-12, Form DIR-11
Following Section 173 and Secretarial Standard-1 (SS-1), a board meeting should be arranged.
After receiving a resignation letter, the company must send out a board meeting notice to all directors at their registered addresses no later than 7 days before the meeting. In urgent situations, a shorter notice period is permissible.
The meeting notice should accompany the agenda, explanatory notes, and a draft resolution.
The board should convene to acknowledge the resignation letter submitted by the director.
Assign the Company Secretary, CFO, or director to submit the necessary forms and documentation to the Registrar of Companies.
Public companies must report the resignation to the stock exchange promptly, adhering to specific timelines based on the nature and origin of the event or information, as mandated by Regulation 30 & 46(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Within 15 days following the board meeting, draft minutes should be sent to all directors via hand delivery, speed post, registered post, courier, or email for their review.
Within 30 days following the receipt of the director's resignation notice, the company must inform the ROC by submitting Form DIR-12, accompanied by necessary documents.
Forms to be used: Form DIR-12
The director who has resigned can send a copy of their resignation to the Registrar of Companies (ROC) using Form DIR-11 within 30 days from the date of their resignation.
Forms to be used: Form DIR-11
The company must update the Register of Directors and Key Managerial Personnel to reflect the resignation and any other necessary changes.
When a director fails to attend any board meetings for twelve months, even without formally requesting a leave of absence, they are considered to have vacated their position.
Forms to be used: Form DIR-12
To remove a director through shareholder resolution, follow the steps of scheduling a Board meeting, convening an EGM, and filing forms DIR-11 and DIR-12.
Forms to be used: Form DIR-11, Form DIR-12
If a company fails to file Form DIR-12 within the stipulated 30-day period following a director's resignation, it faces escalating penalties based on the extent of the delay:
The penalty incurred will be double the standard government fees.
The penalty increases to four times the government fees.
A significant penalty of ten times the government fees is applied.
The penalty reaches twelve times the government fees, and the company might also face legal actions for compounding offences.
It's crucial for companies to adhere to the filing deadlines to avoid these penalties and ensure compliance with regulatory requirements.
Choosing Solocorp for director removal offers several advantages.
Solocorp has a team of professionals who are well-versed in corporate law and the specific procedures outlined in the Companies Act 2013 for director removal.
With a deep understanding of legal requirements, Solocorp experts ensure that every step of the director removal process complies with statutory regulations, thereby minimizing the risk of legal complications.
From the initial consultation to the final submission of necessary forms like DIR-12, Solocorp provides comprehensive support, guiding companies through each process phase.
Understanding that each company's situation is unique, Solocorp offers tailored advice and solutions that best fit the specific circumstances and objectives of the company.