Startup Scratch (Startup Solution Hub) > Startup Research > How to Remove a Director legally in a Startup in India

How to Remove a Director legally in a Startup in India

startup scratch director removal process 9971504105

Power to remove directors is in the hands of shareholders, as we all know that at the end of the day, directors are answerable to shareholders. With procedural aspect under Companies Act, 2013 Shareholders can remove any director before the expiry of his tenure, except any director appointed by Tribunal for prevention of oppression and mismanagement u/s 242 and a director appointed under principle of proportional representation u/s 163.

Right to Remove a Director is Legal Right of Shareholders:

As per Section 169 of the Companies Act, 2013 Shareholders may remove a director in the General Meeting through Ordinary Resolution and this right cannot be damaged by MOA, AOA or any other documents or Agreement.

Removal of Directors Startupscratch

A special notice shall be required of any resolution, to remove a director, or to appoint somebody in place of a director so removed as per Section- 115 of Companies Act, 2013:-

Special notice to Company- Only shareholder/s holding not less than 1% of total voting power or holding shares on which an aggregate sum of not less than Rs. 5,00,000 has been paid up as on the date of notice, can send special notice to the Company for removal of director. The same should be signed by the concerned shareholder/s.

 

Date of meeting- Shareholders have the right to decide the date of meeting.

On receipt of notice of a resolution to remove a director, the company shall immediately send a copy thereof to the director concerned, and the director, whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting.

 

Intimation to Director– the Company shall forthwith send a copy of the notice to the concerned director.

Reasonable Opportunity of being heard– The director concerned may make representation in writing to the company. The Director may request to send his representations along with the notice to the members and to be heard at the meeting. However, the rights may not be available, if on the application either of the Company or of any other person who claims to be aggrieved.

 

Intimation by Company to all shareholders:

  1. The company shall, if the time permits it to do so;
  • Company shall take immediate steps to send the notice to its members, at least 7 clear days before the meeting; and
  • Send a copy of the representation to every member of the company to whom notice of the meeting is sent.

 

  1. The company shall, if the time not permitsit to do so;

For more info contact 9971504105

Notice shall be published in English language in English newspaper and in vernacular language in a vernacular newspaper in the State where the registered office of the Company is situated. At the same time, the notice shall also be posted on the website, (if any). However, it shall be published at least 7 clear days before the meeting.

 

The copy of the representation need not be sent out and the representation need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved,

The Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure needless publicity for defamatory matter; and the Tribunal may order the company’s costs on the application to be paid in whole or in part by the director inspite of that he is not a party to it.

Appointment of director in place of removed director- A vacancy created by the removal of a director under this section may, if he had been appointed by the company in general meeting or by the Board, be filled by the appointment of another director in his place at the meeting at which he is removed, provided special notice of the intended appointment has been given. A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not been removed. If the vacancy is not filled, it may be filled as a casual vacancy. The director who was removed from office shall not be re-appointed as a director by the Board of Directors.

File Form- DIR-12 within 30 days of passing of resolution for appointment of Director.

 

For more info contact 9971504105

Procedure for removal of director:

 

1.   A Special notice for the removal of director be furnished by No. of members (according to requirement of Section- 115 of Companies Act, 2013) to the company at least 14 days before the meeting at which it is to be moved, exclusive of the day on which the notice is served and the day of the meeting. (Section 169)
2.   The company shall, immediately after the notice of the intention to move any such resolution has been received by it, give its members notice of the resolution in the same manner as it gives notice of the meeting.
3.   If is not possible for the company to give notice to all the members, publish by advertisement in the newspaper having an appropriate circulation not less than 7 days before the meeting.
4.   The company must give intimation to the concerned director of the intended resolution by sending a copy of the special notice received by it, forthwith on receipt thereof. The director shall have the right to be heard on the resolution at the meeting.
5.   The director, who is sought to be removed, can make a representation in writing against his removal and request the company to notify it to the company’s members [section 169]. 
6.   Hold and convene a General meeting to discuss besides others the following matters: To pass a [Ordinary resolution] for the removal of director.
7.   In case of listed companies, file a copy of the proceeding of the general meeting in the Stock exchange (s) where the securities of the company are listed.
8.   File Respective e-form  with the Registrar of Companies within 30 days of passing the resolution.
9.   Pay the requisite fees, as prescribed by the Companies (Registration Offices and Fees) Rules, 2014.
10.   Fees can be paid through Credit Card / by cash / by cheque in favour of “MCA Collection Account ICICI Bank” at the prescribed rates.

 

 

For more info contact 9971504105

Comments

Leave a Reply