Removal of Director

The removal of a director from a company is a significant corporate action that requires adherence to specific legal procedures. Here's a breakdown of the process under the Companies Act, 2013:

Conditions for Removal:

• Ordinary Resolution: A company can remove a director by passing an ordinary resolution at a general meeting.
• Reasonable Opportunity: The director must be given a reasonable opportunity to be heard before the removal.
• Not Appointed by Tribunal: The director should not have been appointed by the National Company Law Tribunal (NCLT).

Procedure for Removal:

1. Notice of Resolution: A special notice must be given to the company, specifying the intention to move a resolution for the director's removal.
2. Opportunity to be Heard: The director must be provided with a copy of the special notice and given a reasonable opportunity to submit a written representation.
3. General Meeting: A general meeting of the company is convened to consider the resolution.
4. Voting: Shareholders vote on the resolution. If the resolution is passed by a majority of votes, the director is removed.

Important Considerations:

• Independent Directors: Independent directors re-appointed for a second term can only be removed by a special resolution.
• Director Appointed by Proportionate Representation: Directors appointed under the principle of proportionate representation cannot be removed by ordinary resolution.
• Consequences of Removal: The removed director ceases to hold office immediately.
• Legal Implications: The removal process must be carried out strictly in accordance with the provisions of the Companies Act, 2013. Any non-compliance may lead to legal challenges and penalties.

Additional Factors:

• Board Resolution: In some cases, the board of directors may have the power to remove a director, subject to specific conditions and procedures.
• Voluntary Resignation: A director may voluntarily resign from their position by submitting a resignation letter to the company.
• Disqualification: A director may be disqualified from holding office due to various reasons, such as conviction of an offense, bankruptcy, or other legal grounds.

It is crucial to consult with legal professionals to ensure compliance with all applicable laws and regulations when removing a director.

For more detailed information, please refer to Section 169 of the Companies Act, 2013.

Would you like to know more about a specific aspect of director removal, such as the role of shareholders, the implications for the company, or the potential legal challenges involved?