Removal/Resignation of Director
Expert Legal Assistance for Director Removal or Resignation in India
At My Biz Development we provide expert legal assistance for the removal or resignation of directors from companies in India. Our team ensures a smooth process, guiding you through the legal requirements, documentation, and filings necessary for director removal or resignation.
Removal / Resignation of Director from a Company in India: A Comprehensive Guide
The removal / resignation of a director from a company in India is a significant corporate action that must be carried out in accordance with the Companies Act, 2013. It requires adherence to statutory provisions, such as filing the appropriate forms and obtaining necessary approvals. Whether a director resigns voluntarily or is removed due to non-performance or legal reasons, the company must follow a transparent procedure.
Reasons for the Removal of Director
A director may be removed from a company for several reasons, either voluntarily (resignation) or through a formal removal process initiated by the shareholders. Common reasons for the removal of director include:
Breach of Fiduciary Duty:
If the director fails to act in the best interests of the company, this can result in their removal.
Underperformance:
If directors do not perform their duties competently, it can lead to their removal from the company
Illegal Activities:
If a director is involved in fraudulent or illegal activities, their removal is necessary to protect the company’s reputation and legal standing.
Non-compliance:
Non-compliance with statutory obligations such as failure to attend board meetings or file necessary returns can lead to a director’s removal.
Personal Reasons:
Sometimes, directors may choose to resign voluntarily due to personal reasons or other professional commitments.
Documents Required for Director Removal / Resignation
When initiating the removal of director or accepting a resignation, certain documents need to be prepared and submitted. These include:
• Board Resolution: A resolution must be passed by the board of directors for the resignation or removal.
• Shareholder Approval: For removal, a special resolution passed by the shareholders is mandatory. This requires the majority approval of at least 75% of the shareholders.
• Form DIR-12: This form is filed with Registrar of Companies (RoC) to notify the change in the company’s directorship.
• Consent of the Director: A written consent from the director resigning, in the case of voluntary resignation.
• Notice of Removal: A formal notice of the removal, which may also include details about the reasons for the action, if applicable.
• Board Meeting Minutes: The minutes of the meeting where the resolution for removal or resignation is passed.
Procedure for Director Removal / Resignation
The procedure for director removal / resignation in India involves several steps to ensure compliance with the legal framework under the Companies Act, 2013:
1. Director’s Resignation:
- When director wants to get removed voluntarily, they must submit a resignation letter to the board of directors. The resignation is effective immediately unless a different date is mentioned in the letter.
- The board will then pass a resolution to accept the resignation, and the company will file Form DIR-12 with the RoC.
2. Director’s Removal:
- When a director is removed from the company, it requires a special resolution passed by the shareholders.
- After passing the resolution, company should file Form DIR-12 with the RoC within 30 days of the director’s removal.
- In some cases, if the director is removed for unlawful actions, additional procedures like filing complaints or legal actions may be necessary.
Compulsory Criteria for Director Removal
For a removal of director, certain compulsory criteria for director removal must be met to ensure that the process is legally valid:
• Notice Period: It is mandatory to provide a written notice to the concerned director. The notice should also include the reasons for removal.
• Special Resolution : A director’s removal requires the approval of shareholders through a special resolution, which must be passed by a majority of 75%, as an ordinary resolution is not sufficient.
• Compliance with Statutory Requirements: All necessary forms must be filed with the RoC, and the company’s records should be updated in line with the changes in directorship.
• Directorial Rights: If the director has a contract, it should be reviewed to ensure that the removal is in compliance with the terms outlined therein.
Looking for expert legal assistance for Removal / Resignation of Director from a Company In India? At My Biz Development, we handle everything from drafting Board Resolutions to submitting the required forms with the Ministry of Corporate Affairs (MCA). Trust us to help your company stay compliant with all legal procedures while managing director transitions efficiently. Contact us today!