Removing a Director - Overview:

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, Vakilsearch can help you with removing a director from your company and make the whole process easy for you.

Reasons to Remove a Director

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

There are 3 ways to remove a director from a company:

Step 1:

Holding a board meeting by giving seven days of clear notice

Step 2:

In the meeting, the board members will take note of the resignation

Step 3:

Then they have to pass a resolution in a particular format to that effect

Step 4:

After that, Form DIR-11 needs to be filed by the resigning director in his individual capacity

Step 5:

The company has to file Form DIR-12 with the registrar of companies (RoC) along with the registration letter and the board resolution

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