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.
A director can be removed for any of the following reasons:
There are 3 ways to remove a director from a company:
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.
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 a 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).
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 a 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.
DIR-12 has to be filed within 30 days from the date of resignation. If the company fails to do so, the following penalties will apply:
Created & Posted by Pooja
Income Tax Expert at TAXAJ
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