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, TAXABIDE 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.
Ways to Remove a Director
Director removal
There are 3 ways to removal of director from a company:
Removal of director - When the Directors Tender Their Resignation
Director Remains Absent from the Board Meetings for 12 Months
Removal of Director by Shareholders
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
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.
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.
