Removal of Director from a Company: Meaning, Process, Documents, Fees and Timelines

Directors of the company manage day-to-day operations and manage stakeholders of the organisation. Directors are responsible for the smooth functioning of the company and for protecting the interests of shareholders. The existing director of the company may resign due to better prospects. To remove a director, a company needs to follow the procedure of removal of the director and replacement by appointment of a director. The removal of directors may be quite often which can happen due to various reasons. Bizfoc provides expert services for the removal of directors covering procedures, documents, fees, and time taken.

What is the Removal of Director?

The removal of a director from the company means removing the director from their post. The removal can be done due to various reasons and in various ways. The director holds an important position in a company and its removal requires the fulfillment of lots of legal compliances. This is done to ensure that no director is leaving their office forcefully or due to malafide intentions.

Key Reasons For Removal of Directors

The removal of a director can be due to various reasons, such as:

• Violation of Law: The removal of the director from the company should be done if they violate any laws, rules, or regulations that might cause defamation to the company.
• Negligent: If any director is negligent in their conduct and does not perform their duties correctly, they should be removed from the position of director in the company.
• Fraud: If any director is involved in any fraudulent activity against the company or any other person, such a director should be removed from the company.

Different Processes for Removal of Directors

There are different cases in which a director can be removed from his or her office. The removal of directors can be done through:

• Resignation by Director

  A director can be removed from office if he suo-moto resigns from his post by serving a resignation letter to the company.

• Absence from Board Meeting

  The provisions of the Companies Act, 2013 state that a director's office shall stand vacant if he absents himself from all the board meetings for 12 consecutive months. Therefore, this can cause the removal of a director from the office.

• Decision of Shareholders

  Shareholders of the company are the decision-making body. They can make decisions in duly convened general meetings. They can decide to remove any director from their office.

Procedure for Removal of Directors due to Resignation

The director can vacate his office by filing a resignation letter with the company. In such cases, the removal of the director is done as follows:

• Step 1: Receipt of Resignation Letter

  The process of removal of a director starts when the director sends his resignation letter to the company. The company receives the letter and proceeds to take action on the resignation of the director.

• Step 2: Convene a Board Meeting

  The company's board of directors calls a board meeting to discuss the resignation and pass the board resolution to accept the director's resignation and take the necessary steps to remove the director.

• Step 3: Director's Responsibility

  The director who is resigning from their office shall file Form DIR-11 with the Registrar of Companies (ROC) along with:
  • A certified true copy of the board resolution
  • Proof of delivery of the resignation letter
  • Copy of the resignation letter

• Step 4: File Necessary Forms

  After accepting the resignation, the company should file with the Registrar of Companies (ROC) along with:
  • A certified true copy of the board resolution
  • Resignation Letter

• Step 5: Removal of the Name of the Director

  After filing all the necessary forms and completing all the necessary formalities, the name of the director is removed from the master data of the company on the MCA website.

Procedure for Removal of Directors by Shareholders

The shareholders of a company may remove any director from the company due to various reasons by following these steps:

• Step 1: Convene a Board Meeting

  The company should convene a meeting of the board of directors to inform every director about the removal of directors and to decide the day, date, time, and venue to call the Extraordinary General Meeting (EGM) of the shareholders.

• Step 2: Extraordinary General Meeting (EGM)

  The shareholders shall, at the duly convened meeting, cast their vote on the resolution to remove the director and if the resolution receives the requisite votes, the director is removed from office.

• Step 3: Opportunity of Being Heard by the Director

  The director should be given an opportunity to be heard before removing him/her from the office and before passing the resolution.

• Step 4: Necessary Filing

  After the resolution for the removal of the director is passed, Form DIR-11 and DIR-12 shall be filed with the Registrar of Companies (ROC) along with a certified true copy of the resolution.

• Step 5: Removal of the Name of the Director

  After filing all the necessary forms and completing all the necessary formalities, the name of the director is removed from the master data of the company on the MCA website.

Procedure for Removal of Director Due to Absence

The director can be removed from their office if they do not attend the board meetings for 12 months. In such a case, the removal of directors in company law can be done as follows:

• Step 1: Absence from Meeting

  A director is required to attend the board meetings of the company. If a director does not attend any board meeting for 12 consecutive months, then the office of such director is deemed vacated irrespective of the notice of leave given by such director.

• Step 2: File Form DIR-12

  After the vacation of the office, the company should file Form DIR-12 within 30 days of such vacation with the Registrar of Companies (ROC).

• Step 3: Removal of the Name of the Director

  After filing all the necessary forms and completing all the necessary formalities, the name of the director is removed from the master data of the company on the MCA website.

Documents for Removal of Director

The documents required for the removal of a director are:

• A certified true copy of board resolution:
• Proof of delivery of the resignation letter:
• Copy of resignation letter:
• A certified true copy of the ordinary resolution:

Fees for Removal of Directors

The professional fees for removal of a director can vary based on the reason or procedure of the removal of the director. The fees for the removal of a director are:

Timeline for Removal of Director

The removal of directors involves filing various forms with the regulatory authorities. The procedure for the removal of a director can take around 4 to 5 working days.

Why BizFoc?

BizFoc can be your professional partner in the process of the removal of a director. Here’s how BizFoc can help you:

• Practical Advice.
• Timely Compliances.
• Complying with All Laws and Rules.
• Saving Cost and Time.
• Making the Entire Process Easier.
• Reducing Your Workload.

Conclusion

In conclusion, the removal of a director from a company can occur due to various reasons such as fraud, negligence, or misconduct. The process for removing a director involves a series of steps including resignation, shareholder decisions, or addressing absences from meetings. BizFoc is here to guide you through these processes, ensuring they are conducted smoothly, effectively, and cost-efficiently. Choose BizFoc for expert compliance solutions and avoid the costs of non-compliance!