Removal of Director from Your Company
Remove a company director By Expert Mantra
Remove a company director safely and legally within just 10 days
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Removing a Director – An Overview
A company can add or remove a director at any time. The removal may happen for various reasons, and the procedure differs depending on the situation—generally categorized into three types. Regardless of the reason, Easebis ensures a smooth and hassle-free process to help you remove a director from your company.
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Removal of a Director: Common Reasons
A director may be removed from a company for several reasons, such as:
Incurring disqualifications under the Companies Act
Being absent from board meetings for more than 12 months
Entering into contracts or arrangements that violate Section 184 of the Companies Act
Being disqualified by an order of a court or tribunal
Being convicted of an offence and sentenced to imprisonment of six months or more
Failing to comply with the provisions of the Companies Act, 2013
Resigning voluntarily from their position
Eligibility Criteria to Become a Director in India
To qualify as a company director in India, an individual must fulfill the following conditions:
Must be at least 18 years of age
Must hold a valid Director Identification Number (DIN) issued by the MCA (can be applied for online if not available)
Must not be disqualified under the Companies Act, 2013 (i.e., not declared bankrupt, convicted of an offence, or disqualified by a court/tribunal)
Must provide consent to act as a director by filing Form DIR-2 with the MCA
Must be formally appointed through an appointment letter, with details filed in Form DIR-12 with the MCA
Resignation:
A director also has the right to resign voluntarily by submitting a resignation letter to the company and filing it with the MCA.
Documents Required for Removal of a Director
The following documents are typically needed for removing a director from a company:
Notice of Board Meeting: A notice must be sent to all directors to convene a board meeting where a resolution for removal is passed by majority vote.
Special Notice to the Director: A formal notice must be given to the concerned director, stating the reasons for removal and including a copy of the board resolution.
Resignation Letter (if applicable): If the director chooses to resign voluntarily, their resignation letter should be collected and filed with the MCA.
Form DIR-12: This form must be filed with the MCA within 30 days of the director’s removal to officially update company records.
Board Resolution: A certified copy of the resolution approving the removal should be prepared and submitted to the MCA.
Declaration by the Director: A written declaration from the outgoing director confirming they have no objection to the removal.
Consequences of Not Filing Form DIR-12
Form DIR-12 must be filed with the MCA within 30 days from the date of a director’s resignation. If the company fails to comply, the following penalties will apply:
Delay of 31–60 days: 2 times the normal government fees
Delay of 61–90 days: 4 times the normal government fees
Delay beyond 90 days: 10 times the normal government fees
Delay beyond 180 days: 12 times the normal government fees, along with liability for a compounding offence
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Frequently Asked Questions…
Who has the authority to remove a director from a company?
The shareholders of a company have the authority to remove a director by passing an ordinary resolution at a general meeting, following the procedure laid down under the Companies Act, 2013.
What are the grounds for removing a director from a company?
A director may be removed for several reasons such as disqualification under the Companies Act, prolonged absence from board meetings, violation of legal provisions, court/tribunal orders, or voluntary resignation.
What is the process of removing a director from a company?
The process generally includes holding a board meeting, issuing a special notice to the director, obtaining shareholder approval in a general meeting, and filing the required forms (such as DIR-12) with the MCA.
Are there any legal obligations or compliance requirements in the removal process?
Yes. The company must comply with the procedures mentioned in the Companies Act, 2013, issue proper notices, and file necessary forms with the MCA within prescribed timelines to avoid penalties.
Can a director challenge their removal from the company?
Yes. A director has the right to challenge their removal if they believe the decision was unfair, unlawful, or did not follow the due process. Such challenges are usually made before a court or tribunal.
How long does the removal process usually take?
If all documents and compliances are in order, the removal process can generally be completed within 10–15 working days.
Are there any implications or consequences for the company after removing a director?
The company must ensure it continues to meet the statutory requirement of the minimum number of directors. Non-compliance may attract penalties or legal complications.
Can a director be removed for reasons other than misconduct?
Yes. A director may also be removed due to disqualification, inability to perform duties, prolonged absence, or even voluntarily stepping down.
Do I need professional assistance for the removal of a director from my company?
While it is not mandatory, professional assistance is highly recommended to ensure compliance with legal requirements, avoid penalties, and make the process smooth and hassle-free.
