Remove Directors

A director is removed in the following 3 situations –

1. Director himself gives the resignation
2. Director removed by passing an ordinary resolution
3. Director does not attend three board meetings in a row.

• Director himself gives the resignation In this case, the director submits his resignation to the board. The following steps will be taken to remove his name from the register of director –
  • Firstly, a company holds a meeting of board of directors by giving 7 days of clear notice.
  • In the second step, they decide in the board meeting that whether to accept the resignation or not.
  • If board accepts the resignation of the director, they will pass the resolution accepting the resignation in the third step.
  • After passing the resolution, outgoing director has to mandatorily fill form DIR-11 along with the following documents mentioned below –
    • Board resolution
    • Copy of Resignation letter
    • Proof of delivery of the resignation letter
  • After filing of form DIR-11 by the outgoing directors, company has to mandatorily fill DIR-12 and submits it to registrar of companies along with the following two documents –
    • Resignation letter
    • Board resolution
  • After submitting of all the forms, the name of the director will be removed from the website of ministry of corporate affairs.
• Director removed by passing an ordinary resolution A company has the full power to remove a director anytime by just passing an ordinary resolution in case the director was not appointed by the central government or Tribunal. The process for the same is given below -
  • Firstly, a company holds a board meeting giving 7 days’ notice to all the directors to inform them about the removal of director.
  • When the board meeting held, two more resolutions are passed subject to the approval of the shareholders.
    • Resolution of holding an extra ordinary annual general meeting (AGM)
    • Resolution of removal of the director
  • Annual general meeting will be held by giving 21 days’ notice. In this meeting, members are asked to vote in relation to this matter. If majority of members is in the favour of the decision, the resolution will be passed.
  • Before passing the resolution, one chance is given to the director to defend himself.
  • After passing the resolution, form DIR - 11 & DIR – 12 will be submitted along with the board resolution, ordinary resolution.
  • After submitting all the forms, the name of the director will be removed from MCA website.
• Director does not attend 3 meetings in a row As per section 167 of the companies act, 2013, if a director remains absent from the board meetings for 12 months even after giving due notices for all the meetings, it will be considered that the director has vacated the office and company has to fill form DIR – 12 & his name will be removed from the master data of the company on ministry of corporate website.

If the company fails to file e-form MGT-14 within 30 days of passing of board resolution, the penalty for the same will be –

1. Up to 15 days – 1 time of actual government fee
2. More than 15- 30 days – 2 times of actual government fees
3. More than 30 days – 60 days – 4 times of actual government fees
4. More than 180 days – 10 times of actual government fees.

In case of non-filing of form MGT-14, fine of minimum Rs.5 Lakh is to be charged from the company which may be extended to Rs.25 Lakh.