Resignation of Director

Removal of Director

Governing Section

It is governed under the section 168 of the companies act 2013

It is governed under section 169 of the companies act 2013

Process

It is a process under which the concerned director submits his resignation to the board

It is a process under which If a Director was not appointed by the Central Government or the Tribunal, the Company has the ability to remove him or her by passing an Ordinary Resolution.

Meeting required for a process

Board has the power to accept the resignation of the concerned director

Members meeting required to conduct for removing the director from his office

The opportunity of being heard

The concerned director resign in his own capacity

In the removal process concerned director gets the opportunity of being heard

Required E-Form

DIR-12 & DIR-11

DIR-12 & DIR-11

 

As per section 168 Resignation of Director

A director may resign from his or her position by giving written notice to the Company; upon receipt of such notice, the Board shall take note of it; the Company shall notify the Registrar, and the Company shall include the fact of such resignation in the report of directors laid before the Company's next General Meeting.

A director's resignation shall take effect on the day the notice is received by the company or if stated by the director in the notice, the date specified by the director in the notice, whichever is later. Even after his resignation, the resigned director is accountable for the offenses committed during his term.

Call a Board of Directors meeting [as per section 173 and Secretarial Standard-1 (SS-1)]

a. Upon receipt of the resignation letter, the Company shall send a Notice of Board Meeting to all of the Company's Directors at their registered addresses at least 7 days before to the Board Meeting. In the event of an emergency, a shorter notice can be given.

b. Include the Notice with the Agenda, Notes to the Agenda, and Draft Resolution.

c. Call a meeting of the Board of Directors of the Company to discuss the resignation letter of the Company's Director.

d. To permit the Company's CS, CFO, or any Director to file the required Form and Return with ROC.

e. Within 24 hours of the date of the Board Meeting, the Listed Company must notify the Stock Exchange of the resignation and post it on the Company's website within two working days. [SEBI (LODR) Regulations, 2015, Regulations 30 & 46(3)] .

f. Prepare and circulate Draft Minutes to all Directors for their views within 15 days of the Board Meeting's end, by Hand/Speed Post/Registered Post/Courier/E-mail.

 

Filing of E-Form DIR-12 with the ROC.

The corporation must notify the ROC in Form DIR-12 along with the following papers within thirty days of receiving notice of resignation from the director.

a. A certified genuine copy of the Board Resolution

b. Resignation Notice

c. Evidence of Cessation

The Director submits Form DIR-11.

Within 30 days of his resignation, the Director who has resigned may also provide a copy of his resignation to the ROC in Form DIR-11, together with the accompanying papers.

a. Resignation Notice filed with the Company

b. Proof of Dispatch

c. Acknowledgement from the Company

As per section 169 Removal of Director

 First and foremost, we must comprehend what director removal entails. Removal of a director occurs when the company's Board of Directors decides Suo-moto to remove a director from the company.

The reasons for taking such action vary from company to company, but yes, a corporation can dismiss any of its directors, but there is a process for doing so.

The removal of a director is governed by Section 169 of the Companies Act of 2013. The firm must adhere to this requirement; otherwise, the company and its officers would be subject to penalties under the Companies Act, 2013.

There is an exception to the removal of directors, namely that the corporation cannot remove the following individuals from their positions as directors: –

1. The Tribunal appoints a director

2. The company has exercised its option to appoint not less than two-thirds of the total number of directors in accordance with the proportional representation principle set forth in the Companies Act of 2013.

The following is the method for removing a director:

1. Prepare a notice of board meeting, as well as draught resolution(s) to be passed at the meeting.

2. The company shall inform the concerned director of his dismissal.

3. Notice of the Board meeting, together with the agenda, is sent to all of the company's directors.

4. Convene a board meeting and pass a resolution to discuss the removal of the concerned director, as well as a notice of general meeting to the company's members.

5. The notice of general meeting must be sent to all members at least 21 days before the date of the general meeting, and a special notice with the intention of removing a director by a specified number of members of the company must be passed at least 14 days before the meeting at which it must be moved, excluding the day on which the notice is served and the day of the meeting.

6. A special notice required to be given to the company must be signed by a number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not more than five lakh rupees has been paid up on the date of the notice, either individually or collectively.

7. The notice of general meeting must be sent to all members at least 21 days before the date of the general meeting, with the intention of removing a director by a specified number of members of the company must be passed, or may send special notice at least 14 days before the meeting at which it must be moved, excluding the day on which the notice is served and the day of the meeting.

8. A special notice required to be given to the company must be signed by a number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not more than five lakh rupees has been paid up on the date of the notice, either individually or collectively.

9. A General Meeting is held to allow the removed director to be heard and speak. Ordinary resolutions may be passed if they appear to be just and equitable.

10. Preparation of documents for the removal of the director, as well as notification to the appropriate departments.

**The Board of Directors will not re-appoint the director who was removed from office once he or she has been removed from office.

** It's also worth noting that removing an Independent director requires a two-thirds vote of the members or a special resolution.

For the removal of the Director, only two (2) forms are required: -

  1. MGT-14 E-form
  2. DIR-12 E-form

Within thirty (30) days after the passing of the ordinary resolution in the general meeting, the Company must file the above-mentioned documents with all relevant attachments with the Registrar.

Making a proper entry in the company's statutory registers within the timeframe required by the Companies Act, 2013.

If a firm violates these requirements, the company and any of its officers who is in default shall be fined not less than fifty thousand rupees but not more than five lakh rupees.

Form FC-4, as required by Section 381: The company's annual returns are the subject of this form. It must be filed within sixty days of the previous financial year's conclusion.