Director Removal or Resignation – Seamless Compliance with CA Vakeel

  • We assist in processing voluntary resignations, from preparing resignation letters and board resolutions to filing Form DIR-12 with the Registrar of Companies.
  • If a director has not attended any board meetings for 12 months, we help companies declare the office as vacated, update records, and notify the MCA with proper filings.
  • Our legal experts help conduct shareholder meetings, issue special notices, and ensure a fair and documented removal process under Section 169 of the Companies Act.
  • We handle the preparation and timely submission of statutory forms, DIR-11 (by the resigning director) and DIR-12 (by the company), to update the MCA database.
  • Post-removal, we ensure that all internal registers, GST, labour law, and industry-specific filings reflect the director change, ensuring seamless statutory compliance.

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Understanding Director Removal in Companies

Company Directors manage business operations, while shareholders own the company. Shareholders may remove a director due to poor performance, legal violations, or resignation. This process requires strict compliance with the Companies Act 2013 and must prioritize fairness, transparency, and the company’s best interests. At CA Vakeel, we guide you through this complex transition, ensuring legal compliance and seamless execution.

Valid Reasons for Removing a Director

Directors can be removed if they:

  1. Breach legal eligibility under the Companies Act.
  2. Miss board meetings for 12+ consecutive months.
  3. Violate Section 184 (conflict of interest in transactions).
  4. Face court/Tribunal orders prohibiting directorship.
  5. Receive criminal convictions (6+ months imprisonment).
  6. Resign voluntarily or fail statutory compliance.

Note: Private companies must have at least 2 directors to operate.

Three Legal Pathways to Remove a Director

  1. Voluntary Resignation
    • Director submits written resignation; effective upon company receipt or a specified later date.
    • Post-resignation liability remains for offences committed during tenure.
  2. Automatic Removal for Absence
    • Director vacates office if absent from all board meetings for 12 months (Section 167).
  3. Shareholder Resolution
    • Shareholders vote via Ordinary Resolution in a General Meeting (excludes government-appointed directors).

Legal Process for Each Removal Method

A. Resignation Process

  1. Director submits resignation to the board.
  2. Company holds board meeting within 7 days (with shortened notice if urgent).
  3. File Form DIR-12 with ROC within 30 days (attach resignation letter, board resolution).
  4. Update Director Register and MCA records.
  5. Listed companies must notify stock exchanges immediately.

B. Removal by Shareholders

  1. Board proposes removal in an Extraordinary General Meeting (EGM).
  2. Issue EGM notice to shareholders 21 days in advance.
  3. Director receives 14-day notice to defend themselves.
  4. Shareholders vote via Ordinary Resolution.
  5. File Form DIR-12 with ROC post-approval.

C. Automatic Removal for Absence

  1. Confirm 12-month absence from board meetings.
  2. Declare position vacant (Section 167).
  3. File Form DIR-12 with ROC.

Avoiding Legal Risks in Director Removal

Critical Requirements

  • Special Notice (Section 115): Mandatory for shareholder-initiated removal.
  • Director’s Right to Defence: Must be heard before removal.
  • Reappointment Ban: Removed directors cannot be reappointed.

Penalties for Late DIR-12 Filing

Delay PeriodPenalty Fee
30–60 days2× govt fee
60–90 days4× govt fee
90–180 days10× govt fee
Beyond 180 days12× govt fee + legal action

After-Effects and Regulatory Updates

  • Director’s Status: Loses all authority to represent the company.
  • Company Reputation: Poorly handled removals risk public trust.
  • Legal Updates Required: Amend records under:
    • GST, Shops Act, Factories Act, FEMA, EPF/ESI, and industry-specific laws.

Expert Guidance for Director Removal

We ensure: Full Compliance: Adherence to Sections 169, 115, and 167 of the Companies Act. End-to-End Support: From notice drafting to ROC filings (DIR-11/DIR-12). Risk Mitigation: Avoiding penalties, lawsuits, and reputational damage. Post-Removal Advisory: Regulatory updates across labour, tax, and corporate laws.

Let our legal experts manage your director removal with precision. Contact CA Vakeel today.

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