Removal of Director2022-09-26T20:02:37+05:30

Removal of Directors

A Director may voluntarily resign from the Board of Company or be removed from the Board of Directors for different reasons, the company or director can do so by following the provision of Companies Act 2013.

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    Removal of Directors

    Directors of the company are responsible for controlling, managing, and directing the affairs of a company. They play a crucial role in the growth and development of a company. At times, there may be conflict of opinion between the company and the director or amongst the directors themselves. The shareholders have the ultimate power to remove a director from the company. A director may voluntarily resign from the Board of Directors, or the shareholders may ask the director to resign due to different reasons such as conflicts, breach of duties, poor performance, disagreement between director and company, etc. If a director refuses to resign, then he may be removed by shareholders from his office as per the procedure prescribed under Companies Act 2013 and rules thereunder.

    Circumstances of Directorship Cessation

    • Resignation by the Director

    A director may resign from his position as a director of a company, by giving a proper notice to the company of his intention to resign. Thereafter, the Board shall accept the resignation and file the relevant forms to the Registrar of Companies (ROC).

    • Removal of a Director

    A director may be removed from the post of Director of a company before his expiry of term by the shareholders. The members/shareholders have to give a special notice and an ordinary resolution shall be passed for removal of a director (special resolution is required in case of removing an Independent Director, serving his second term)

    • Death of a Director

    A director shall cease to be a director of the company in the event of his death. The company shall file the relevant forms along with the death certificate to the Registrar of Companies (ROC) in order to file cessation.

    • Vacation of Office

    A director of a company shall be vacated from his office and shall cease to continue as director of a Company if he attracts any of the grounds mentioned under Section 167 of Companies Act 2013.

    • Disqualification of a Director

    A director of a company shall be disqualified and shall not be eligible for appointment as a director of a company if he attracts any of the grounds mentioned under Section 164 of Companies Act 2013.

    What are the Common Reasons for Removal of Directors?

    • Poor Performance

      A director of a company is the one of the important personnel who is responsible for the overall growth and development of the company. The shareholders can remove those directors who have underperformed or has not met the shareholder’s expectations.

    • Disputes and Conflicts

      There may be certain situations where the Board may disagree with each other on a certain matter, which may result in unending disputes or conflicts between the directors. In this kind of scenario, the shareholders may use their power and remove rebels in order to carry forward the business operations of a company.

    • Change in the structure of Company

      A company may sometimes go into restructuring by way of merger, takeover, acquisition, debt restructuring or transfer of shares to another entity. In these cases, the owners and shareholders of the company may change, which shall also change the composition of Board of Directors. Here, the existing director may have to resign from the Board.

    • Succession Planning of the Company

      Succession planning is a practice followed by company where it passes on directorship roles from existing directors to new talents/mentors in the company. This is an  important step towards continuous improvement and development of managerial skills for better growth and long-term success of the company.

    What is included in our Removal of Directors package?

    • Consultation on process of removal of director

    • Verification of Documents and Information provided

    • Preparation and Filing of Form DIR-12 for resignation of director

    • Government Challan and Acknowledgement number

    Minimum Requirements for Removal of Directors

    • Director Identification Number (DIN)

    • Approval of Board of Director (In case of resignation)

    • Approval of Shareholders (In case of removal by shareholders)

    • Special Notice (In case of removal by shareholders)

    • Digital Signature Certificate (DSC) of Existing Director of Company

    Procedure for Removal of Directors

    • Collection of required Information and Documents

      In the first step, we shall collect the required information and documents as per the checklist. We shall verify and confirm the documents and information provided.

    • Preparation of Documents for filing with ROC

      Once we receive all the required information and documents from your side, we shall then prepare the documents required such as board resolution, general meeting resolution etc. for removal of director from the company.

    • Filing of Forms with ROC

      After preparation of documents, we shall then file relevant forms with the Registrar of Companies (ROC) for removal or resignation of director from the company.

    • Approval by ROC

      ROC shall check and verify the documents submitted and grant approval, respectively. An intimation of approval via e-mail shall be sent after the form is processed by Registrar of Companies (ROC).

    Documents Required for Removal of Directors

    • Memorandum of Association (MOA) and Articles of Association (AOA) of Company

    • Identity and Address proof of the director : PAN / Passport / Driving License / Election card / Aadhaar card / Ration card / Electricity bill / Telephone bill.

    • Resignation Letter / Death Certificate

    • List of Shareholder or copy of shareholder’s register

    • Any other Document as may be required.

    FAQ

    How much time is needed for removal of director in a company?2021-11-10T13:30:02+05:30

    On average, it takes 4-5 working days for removal of director by filling Form DIR-12. However, this is also dependent on the approval by government authority.

    Is physical presence of director required during the filing of forms for removal of director?2021-11-10T13:29:39+05:30

    No, the process is a completely online. All the required documents are filed electronically, so you would not need to be physically present at all. You would just need to send us scanned copies of all the required documents & forms.

    Who has the authority to accept the resignation of an outgoing director in the company?2021-11-10T13:29:16+05:30

    The Board of Directors shall acknowledge the receipt of resignation of outgoing director and intimate the Registrar of Companies (ROC) in Form DIR-12.

    What shall be the effective date of resignation by the director?2021-11-10T13:28:51+05:30

    The resignation of a director shall take effect from the date on which the notice is received by the company or the date (if any) specified by the director in the resignation notice (whichever is later).

    What is the time limit for filing Form DIR-12?2021-11-10T13:28:30+05:30

    The time limit for filing Form DIR-12 is 30 days from the date of passing resolution in general meeting/board meeting.

    Can a director be liable even after he resigns from the Board of Directors?2021-11-10T13:28:07+05:30

    The director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.

    Is filing of Form DIR-12 mandatory after resignation or removal of director by the company?2021-11-10T13:27:41+05:30

    Yes, filing of form DIR-12 by the company to Registrar of Companies (ROC) is mandatory for resignation or removal of director.

    Is filing of Form DIR-11 mandatory for resignation of director?2021-11-10T13:27:16+05:30

    No, filing of form DIR-11 is voluntary for resignation of director.

    Can a Director with Deactivated DIN resign from the company?2021-11-10T13:26:22+05:30

    Yes, a Director with Deactivated DIN can also resign or be removed from the company.

    Who can remove the director of a company?2021-11-10T13:23:44+05:30

    The shareholder of the company can remove the director of a company as per the requirement under the meeting duly held.

    Can a director be removed from the company without his consent?2021-11-10T13:22:30+05:30

    Yes, a director can be removed from the company without his consent, after giving him a reasonable opportunity of being heard.

    Whether shareholders’ approval is required for the removal of a director from the company?2021-11-10T13:21:11+05:30

    Yes, shareholders’ approval under the general meeting is required for the removal of the director from the company.

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