Removal of Director from Your Company
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Remove a company director without any legal implications in just 10 days T&C*
Why should I Use Easebis before Removing A Director
Easebis has a team of compliance experts who can help you remove a company director in just 10 days
Removing A Director - An Overview
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. Irrespective of that, Easebis can help you with removing a director from your company and make the whole process easy for you.
Removal of Director: Reasons
A director can be removed for any of the following reasons:
- If they incur any of the disqualifications specified under the Companies Act
- If they absent themselves from board meetings over 12 months
- If they enter into contracts or arrangements against the provisions of Section 184 of the Companies Act
- If they are disqualified by an order of a court or tribunal
- If they are convicted by a court of any offence and sentenced to imprisonment for not less than six months
- If they have not abided by the terms and protocols mentioned in the Companies Act of 2013
- If they have resigned voluntarily from their position.
Eligibility Criteria to be a Director
To be eligible to be a director in a company in India, an individual must meet the following eligibility criteria:
- The individual must be at least 18 years of age
- The individual must have a valid DIN issued by the MCA. If the individual does not have a DIN, they can apply for it online
- The individual must not be disqualified under the Companies Act, 2013. This means that the individual must not have been declared bankrupt, convicted of an offense, or disqualified by a court or tribunal
- The individual must give their consent by filing Form DIR-2 with the MCA
- The individual must be appointed with an appointment letter and must be filed with the MCA in Form DIR-12
- Resignation: A director can also resign voluntarily by filing a resignation letter with the company and the MCA.
Documents Required for a Director Removal
The following documents are needed for removal of director
- Notice of Board Meeting: The first step in the removal of a director is to hold a board meeting and pass a resolution for the removal of the director. A notice of the board meeting must be sent to all the directors of the company, and the resolution must be passed with a majority vote
- Special Notice to Director: A special notice must be sent to the director who is being removed. This notice should contain the reasons for the removal of the director, along with a copy of the board resolution
- Resignation Letter: If the director being removed wishes to resign voluntarily, a resignation letter should be obtained and filed with the MCA
- Form DIR-12: Form DIR-12 is the form used to file the details of the removal of the director with the MCA. This form must be filed within 30 days of the removal of the director
- Board Resolution: Certified resolution passed in favour of the director removal should be prepared and file directly with the MCA
- Declaration by Director: A declaration must be obtained from the director being removed stating that they have no objection to the removal.
Consequences of Not Filing Form DIR-12:
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:
- After 30 days – within 60 days: twice the government fees
- After 60 days – within 90 days: 4 times the government fees
- If it exceeds 90 days: 10 times the government fees
- If it exceeds 180 days: 12 times the government fees and will be booked for the compounding offence as well Removal
Why Choose Easebis
Frequently Asked Questions (FAQs)
The authority to remove a director lies with the shareholders of the company. A resolution passed by the shareholders through a special resolution or an extraordinary general meeting (EGM) is required to remove a director.
Common grounds for removing a director may include breach of fiduciary duties, violation of company policies, involvement in fraudulent activities, conflict of interest, persistent non-compliance, or the director’s inability to carry out their duties effectively.
The process typically involves convening a board meeting or an EGM, where the shareholders vote on a resolution for the removal of the director. The resolution must be passed by the required majority and subsequently filed with the appropriate government authorities.
Yes, there are legal obligations and compliance requirements to be followed while removing a director. These may include giving notice to the director, maintaining proper records of the resolution, updating the company’s statutory registers, and submitting relevant documents to the regulatory authorities.
Yes, a director has the right to challenge their removal if they believe it was done unfairly or unlawfully. They may seek legal remedies through appropriate legal channels to contest the removal.
The duration of the removal process can vary depending on factors such as the complexity of the situation, the availability of required documents, and the response time of the regulatory authorities. It is advisable to consult with professionals experienced in company law to ensure a smooth and efficient process.
Removing a director can have various implications for the company, such as a change in the board composition, potential legal disputes, or impacts on the company’s reputation. It is important to assess and manage these implications carefully.
Yes, a director can be removed for reasons other than misconduct, such as retirement, resignation, or if the director is no longer required due to a change in the company’s objectives or strategic direction.
While it is possible to handle the process independently, seeking professional assistance from company law experts or corporate consultants is advisable. They can provide guidance, ensure compliance with legal requirements, and help navigate any complexities or potential challenges that may arise during the removal process.
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Excellent customer service from EaseBis team. Right from the time, the business engagement starts to the completion of e-filing and tax refund (if applicable), the team at EaseBis constantly assists the customer and is proactive to resolve queries in the shortest possible time.