Udyog Suvidha Kendra
Director Removal Services

Remove Director
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Removing a director is a structured legal process governed by the Companies Act, 2013. Whether due to resignation, disqualification, or board decision, timely removal ensures proper compliance. We simplify the process with accurate documentation, DIR-12 filing, and board resolution support.

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What Does Director Removal Mean?

Definition and Legal Context

Director removal refers to the formal process of ending a director’s role in a Private Limited Company before the end of their tenure. It is regulated under the Companies Act, 2013, ensuring that companies can function efficiently with an active and responsible board. The process is recorded with the Ministry of Corporate Affairs (MCA) through the filing of Form DIR-12.

A director can be removed due to various reasons like non-performance, violation of duties, inactivity, or even resignation. Once removed, the individual no longer has the authority to represent or make decisions for the company.

Reasons for Removing a Director

  • Voluntary resignation submitted by the director due to personal or professional reasons.
  • Non-attendance of board meetings for 12 months or more without valid justification.
  • Involvement in fraudulent or illegal activities, leading to disqualification under Section 164.
  • Board or shareholder decision in the interest of better company management.
  • Court or tribunal order due to misconduct or statutory violations.
Director Removal

Eligibility and Legal Basis for Removal

Understanding who has the authority to remove a director and the legal rules governing the process is crucial to ensure compliance. The Companies Act, 2013 provides clear guidelines for different removal scenarios.

Who Can Initiate Director Removal?

A director can be removed by either the Board of Directors or the shareholders, depending on the reason for removal. If the director resigns voluntarily, the process begins with their formal resignation letter, which the board accepts via resolution. In cases involving misconduct, inactivity, or loss of confidence, shareholders must pass an ordinary resolution in a general meeting after serving a special notice. The ROC must be informed within the prescribed time to validate the removal.

Section 168

Covers voluntary resignation of directors and the need to file DIR-12.

Section 169

Allows shareholders to remove a director before their term ends by passing an ordinary resolution.

Section 164

Lists disqualifications like insolvency, conviction, or default in compliance that make a director ineligible.

Section 167

States when a director is considered to have vacated office, especially due to prolonged absence or disqualification.

These provisions ensure that the company acts within the law while safeguarding stakeholder interests and governance standards.

Types of Director Removal

Removing a director can occur in multiple ways depending on the situation—voluntary exit, shareholder decision, or disqualification. Each method follows a distinct legal process under the Companies Act, 2013, and must be properly documented.

Voluntary Resignation

A director may choose to resign for personal, professional, or health-related reasons. In such cases, the director submits a written resignation letter to the board, and the company must acknowledge it by passing a board resolution.

The resignation must be reported to the Registrar of Companies by filing Form DIR-12 within 30 days. The resigning director may also optionally file Form DIR-11 as a self-declaration to the MCA.

Removal by Shareholders (Section 169)

If shareholders believe a director is underperforming, inactive, or acting against the company’s interest, they may remove the director by passing an ordinary resolution in a general meeting as per Section 169 of the Companies Act, 2013.

A special notice must be sent to all shareholders at least 14 days before the meeting. After the resolution is passed, the company must file Form DIR-12 with the ROC to legally record the removal.

Removal Due to Non-Attendance or Disqualification

Under Section 167, if a director fails to attend any board meeting for 12 consecutive months without leave, they are deemed to have vacated office.

Similarly, if a director is disqualified under Section 164 due to insolvency, criminal conviction, or non-compliance with statutory filings, the company must proceed with removal. In such cases, shareholder approval is not required, but the company must still file Form DIR-12 with the ROC.

Step-by-Step Director Removal Process

Whether a director resigns voluntarily or is removed by the company, following the correct legal process is essential to ensure transparency and compliance with the Companies Act, 2013.

1

Obtain Resignation Letter or Initiate Removal Proposal

If the director resigns, they must submit a signed resignation letter to the board. In case of shareholder-initiated removal, a special notice must be issued by a shareholder holding at least 1% of voting power or shares worth ₹5 lakhs.

2

Convene a Board Meeting

The board should hold a Board Meeting to acknowledge the resignation or approve the proposal to remove the director. For shareholder-initiated removal, the board will fix the date and time of the General Meeting.

3

Issue Notice of General Meeting (if required)

If removal is not voluntary, send a notice of general meeting along with the explanatory statement to all shareholders, at least 21 clear days before the meeting, as per legal requirements.

4

Pass the Resolution

In the General Meeting, pass an ordinary resolution for director removal. In case of resignation, the board passes a board resolution accepting it. The resolution must be recorded in the company’s minutes.

5

File Form DIR-12 with ROC

Within 30 days of the resolution, the company must file Form DIR-12 with the Registrar of Companies (ROC), along with the resignation letter and resolution copies. Optionally, the director can also file Form DIR-11.

✓

Update Company Records

Finally, the company must update its statutory registers and remove the director's name from the MCA portal and internal documents, ensuring all legal and administrative records reflect the change.

Required Documents

Proper documentation ensures the director removal process is legally valid and in compliance with the Companies Act, 2013. The following documents are necessary:

Resignation Letter (if applicable)

A signed letter from the director stating their intention to resign and the effective date.

Board Resolution

A resolution passed by the board of directors to either accept the resignation or approve the removal.

Notice of General Meeting

A notice sent to shareholders, informing them of the meeting date and agenda for director removal.

Ordinary Resolution

The resolution passed during the general meeting by shareholders, approving the removal of the director.

Form DIR-12 (Mandatory)

A mandatory form filed with the ROC, notifying them of the director’s resignation or removal.

Form DIR-11 (Optional)

An optional form that the director may file to confirm their resignation to the ROC.

Updated Statutory Registers

The company’s updated records, including the Register of Directors, reflecting the removal or resignation.

Consequences of Non-Compliance

Failing to properly remove a director or update records can lead to serious legal and financial repercussions.

Penalty for Non-Filing of DIR-12

If Form DIR-12 is not filed within 30 days of the director’s resignation or removal, the company may face additional fees and late charges. Persistent failure can result in ROC issuing notices and initiating further action.

Disqualification of Directors

Inaccurate or outdated records with the Ministry of Corporate Affairs (MCA) may lead to disqualification of existing directors under Section 164 of the Companies Act, especially if the company defaults in filings for three consecutive years.

Legal Disputes and Lack of Clarity

If removal is not properly documented, the outgoing director may still appear as an official representative of the company, which can lead to confusion in legal matters, banking transactions, or investor communications.

MCA Scrutiny and Compliance Risk

Non-compliance with proper removal procedures may attract scrutiny from the Registrar of Companies and lead to inspections, orders for rectification, or legal proceedings under Section 447 (fraud) if found willful.

Difficulty in Raising Funds or Expansion

Investors and financial institutions conduct due diligence through MCA records. Any inconsistency in director information can raise red flags and affect funding, partnerships, or credibility in the market.

Frequently Asked Questions

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