Remove Director
Director resignation is a legal process involving MCA compliance through the filing of Forms DIR-11 and DIR-12. This is a key step to ensure proper director removal from company records under the Companies Act, 2013.
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Removal Of Director
The removal of a director from a company is a significant corporate action. It can be initiated by the shareholders, or a director may choose to resign voluntarily. The entire process is strictly governed by the Companies Act, 2013, and requires meticulous adherence to legal procedures to avoid penalties.
Methods for Director Removal
There are three primary ways a director can be removed from a company.
1. Voluntary Resignation
A director can resign by submitting a written notice to the company. The resignation becomes effective on the date the company receives the notice or a later date specified by the director. The company must then file Form DIR-12 with the RoC within 30 days to update its records. The resigning director can also file Form DIR-11 to inform the RoC directly.
2. Non-Attendance
As per Section 167 of the Companies Act, a director automatically vacates their office if they fail to attend any board meetings for a continuous period of 12 months. The company must then file Form DIR-12 to officially notify the RoC of the vacancy.
3. Shareholder-Initiated Removal
Shareholders have the authority to remove a director by passing an ordinary resolution. This procedure is governed by Section 169 of the Companies Act and requires the following steps:
- Special Notice: A special notice must be sent to the company by the shareholders proposing the removal.
- Board Meeting: The Board of Directors convenes a meeting to take note of the special notice and call for an Extraordinary General Meeting (EGM).
- EGM Notice: A notice of the EGM, including the resolution for removal, is sent to all members and the director to be removed. The director has the right to be heard at the meeting.
- Voting: The resolution for removal is put to a vote at the EGM. If it passes, the director is removed.
- RoC Filing: The company must file Form DIR-12 within 30 days of the resolution to update its records with the RoC.
Penalties for Delayed Filing
Failing to file Form DIR-12 within the 30-day deadline after a director’s cessation can result in significant penalties. The late filing fees escalate based on the delay, starting from a small fee and increasing up to 12 times the government fees for delays over 180 days.
Why Choose FileMyFirm?
The director removal procedure is complex and requires strict adherence to legal standards. FileMyFirm specializes in navigating the intricacies of director removal and resignation, ensuring full compliance with the Companies Act, 2013. Our experts handle all necessary documentation and filings, providing a smooth and legally sound process.
Frequestly asked questions ( FAQ )
The process for removing a director before the expiry of their term is governed by Section 169 of the Companies Act, 2013. This section empowers the shareholders of the company to remove a director by passing an Ordinary Resolution in a general meeting.
The removal process involves several mandatory steps:
Special Notice: A shareholder (or group of shareholders) must issue a special notice to the company proposing the director’s removal.
Board Meeting: The Board of Directors takes note of the special notice and calls an Extraordinary General Meeting (EGM).
Right to be Heard: A copy of the resolution must be sent to the director being removed. The director has the right to be heard at the EGM.
EGM and Voting: At the EGM, the resolution for removal is passed by an ordinary majority of shareholders.
MCA Filing: The company files Form DIR-12 with the Registrar of Companies (RoC).
The company must file Form DIR-12 (Notice of appointment/change/cessation of a Director) with the Registrar of Companies to officially intimate the removal. This form must be filed within 30 days from the date the Ordinary Resolution was passed in the Extraordinary General Meeting (EGM).
Failure to file Form DIR-12 within the mandatory 30-day period attracts penalties in the form of late filing fees. These fees are statutory and escalate significantly based on the length of the delay, potentially increasing up to 12 times the normal government filing fee for delays extending beyond 180 days.