A Company may, by ordinary resolution, remove a Director, not being a Director appointed by the Tribunal under section 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard. [Section 169(1)]
An Independent Director re-appointed for second term shall be removed by the Company only by passing a Special Resolution and after giving him a reasonable opportunity of being heard. [Section 169(1) First Proviso]
Director who does not attend a Board Meeting for 12 months, starting from the day of first board meeting on which he was absent even after giving due notice for all the meetings, it shall be deemed that he has vacated the office and a Form DIR – 12 will be filed on his name and his name will be removed from the Ministry of Corporate Affairs. [Section 167]
- A special notice shall be required to remove a Director.
- A special notice required to be given to the Company shall be signed, either individually or collectively by such number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not less than five lakh rupees has been paid up on the date of the notice. [Section 115 and Rule 23(1) of the Companies (Management and Administration) Rules, 2014]
- A vacancy created by the removal of a director 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.
- The Director so removed shall not be re-appointed as a Director by the Board of Directors.
Following Procedure is to be followed [Section 169]
- Special Notice by the Members [Section 115, 169(2) and Rule 23 of the Companies (Management and Administration) Rules, 2014]
A special notice shall be required to remove a director or to appoint somebody in place of a director so removed, at the meeting at which he is removed. Such notice shall be sent by members to the Company not earlier than three months but at least fourteen days before the date of the meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting.
- Disclosure to the Stock Exchange by Listed Company [Regulation 30 & 46(3) of the SEBI (LODR) Regulations, 2015]
Listed Company shall submit the disclosure of receipt of special notice to remove a director to the Stock Exchange within 24 hours from the receipt of Notice and post the same on the website of the Company within 2 working days.
- Obtain Written Consent and Declaration from the Proposed Director [Section 152 and 160]
If members send a special notice for appointing a new director in place of the one who is proposed to be removed, then such notice shall be accompanied by a deposit of Rs. 1 lakh per candidate. And along with that the Proposed Director has to submit Form DIR-2 (Consent to act as a Director) and Form DIR-8 (Intimation by Director about his disqualification) to the Company.
- Convene a Meeting of Board of Directors [As per section 173 & Secretarial Standard-1 (SS-1)]
- Refer to the Procedure for Conducting Board Meeting for a detailed procedure.
- Prepare and Circulate Draft Minutes within 15 days from the conclusion of the Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the Directors for their comments. [Refer the Procedure for Preparation and Signing of Minutes of Board Meeting]
- Convene General Meeting [Section 96, 100 and SS-2]
- Refer to the Procedure for Conducting General Meeting for a detailed procedure.
- Prepare the minutes of General Meeting, get them signed and compile accordingly. [Refer the Procedure for Preparation and Signing of Minutes of General Meeting].
- File Form MGT-14 with ROC
The company shall file a copy of the Special Resolution with the Registrar of Companies (ROC) in form MGT-14 within 30 days of passing such resolution.
- File Form DIR-12 with ROC
Company shall file Form DIR-12 for cessation of office of the Director or appointment of Director within 30 days of General Meeting along with the following documents
- For Cessation of Director
- Certified true copy of Ordinary Resolution / Special Resolution
- Certified true copy of Special Notice.
- For Appointment of Director
- Certified true copy of Ordinary Resolution
- Details of Interest in other entities
- Form DIR-2- Consent to act as a Director
- Form DIR-8-Intimation by Director about his disqualification.
- Making Necessary entries in Register of Directors
Company should make necessary entries regarding appointment/removal of Director in the Register of Director and Key Managerial Personals and Register of contracts and arrangements in which directors are interested in Form MBP-4.
- File Necessary Amendment Application under following Acts
- Goods and Services Act
- Shops & Establishment Act
- Factories Act
- Foreign Exchange Management Act
- Inter-State Migrant workmen Act
- Private Security Agency Act
- Other Labour Laws
- Industry Specific Laws