Remove a Director

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Removing a Director - Overview:

     It is possible to add or remove a director from the company at any time. There are different reasons why a director is removed and there are three different procedures based on the reason. Irrespective of that, Single Key Advisory can help you with removing a director from your company and make the whole process easy for you.

Reasons to Remove a Director

Ways to Remove a Director

There are 3 ways to remove a director from a company:

1. When the Directors Tender Their Resignation

The steps to be followed in this scenario are:
  • Step 1: Holding a board meeting by giving seven days of clear notice
  • Step 2: In the meeting, the board members will take note of the resignation
  • Step 3: Then they have to pass a resolution in a particular format to that effect
  • Step 4: After that, Form DIR-11 needs to be filed by the resigning director in his individual capacity
  • Step 5: The company has to file Form DIR-12 with the registrar of companies (RoC) along with the registration letter and the board resolution
  • Step 6: When all the forms are filled and the formalities for the removal of the director are done, the name of the director will be removed from the master data of the company on the Ministry of Corporate Affairs (MCA) website.

2. Director Remains Absent from the Board Meetings for 12 Months

  • Step 1: If a director absents himself from all the meetings of the board of directors held over a period of twelve months, with or without seeking leave of absence from the board, they are considered to have vacated their office as per Section 167
  • Step 2: A Form (DIR-12) must be filed
  • Step 3: Upon completion of the formalities, the concerned director’s name will be removed from the database of the Ministry of Corporate Affairs (MCA).

3. Removal of Director by Shareholders

  • Step 1: A notice is sent to all the shareholders for a board meeting required to be conducted within seven days from the date of the issue
  • Step 2: 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
  • Step 3: After providing a 21-day notice, the second meeting of shareholders is held to vote on the resolution passed earlier and the director who is being removed by the shareholders will be allowed to speak on their removal
  • Step 4: The shareholders must file Form DIR-12, along with the attachments of the board resolution, and an ordinary resolution
  • Step 5: Once all the formalities are over, the name of the concerned director is removed from the database of the Ministry of Corporate Affairs (MCA) and its website.

This is the simplified version of the whole process. The removal procedure has to be carried out carefully and should follow the procedure laid down in the Companies Act.

Consequences of Not Filing Form DIR-12:

Frequently Asked Questions (FAQ’s)

What is the time permitted for intimation by company to all shareholders?

Send notice to its members clear seven days before the meeting, along with a copy of the representation copy.

How much time does it take for the 'removal of director'?

The member who proposes the dismissal should provide a 'Special Notice' of a resolution to remove a director at least 28 days before the meeting at which the director may be excluded.

Could be it possible that company removes its director without his consent?

There may be no alternative option left for the Company than to seek the removalof Director by consulting to the Board and with a majority of shareholders under (AOA) of the Company.

Could be it possible that a director removes different director?

Under the Companies Act, 2013, in a private company, a shareholder can appoint a director, so ideally only they hold the authority to remove directors. However, in proprietary companies, the removal of director can be commenced by a majority of directors if the constitution permits it.

What is the basic learning before removing a Director of Private Limited Company?

While carrying change in the Board of directors, the Company must obtain consent from its Board and members, as required by passing a resolution and statutory limit after removalof Director or resignation.

What needs to be done with the shares after ending tenure as director?

No, even after the end of the tenure as director, a person can hold the shares in the Company only if it is not subscribed as a condition to appointment as provided by AoA.

How to assign the shares during the change of director in the Company?

The shares of the Company shall be transferred by way of completing the Share Transfer deed and by affixing the stamps as per the rates mentioned in the Stamp Act of the concerned State after the change.

If the Company doesn't reply to ROC Notice, what is the 1st consequence of the same?

As per Notice of 'ROC u/s 248(1)', this notice is the first step toward struck off of Company. If 'Company' fails to reply such notice within 30 days of publication of note, ROC shall strike off the name of Company in its records.

Whether directors of the Company should be personally liable for non-compliance after strike off of Company?

As per Section 166 Director has to adhere to the duties mentioned in such a section. In case the Company got struck off, they shall be personally responsible for such statutory liabilities.

What are the Consequences of not filing the form DIR-12?

In 30 days of date of the resignation, if the company fails to or doesn’t file the 'form DIR-12', a specific concrete Government fees- Penalty will be charged.