A company may by passing an ordinary resolution remove a director before the expiry of the period of his office. A company can use Section 169 of the Companies Act 2013 for the removal of any director, so the members of the company have effective control over the directors by removing all such directors whose continuance in the company as a director is not in the interests of the company. They can remove the director using this section, as this section applies regardless of the manner of appointment of the director, it applies even anything contrary is contained in articles of the company or any agreement is done between the company and director regarding the period or removal of the director. It applies to all kinds of directors whether he is a rotational director, non-rotational director, additional director, director filing a casual vacancy, alternate director, women director, nominee director, Indian resident director, independent director, small shareholders’ director or any other director.
Procedure for removal of director:
A director may be removed before the expiry of the period of his term by following the procedure as follows:
- Special notice: Special notice shall be required for proposing a resolution for the removal of a director. The intention to move the resolution for removal of a director must be given to the company not earlier than 3 months before the date of the general meeting but at least 14 days before the general meeting. And the notice is signed by members holding not less than 1% of the total voting power or paid-up share capital of Rs.5 lakh whichever is lower.
- After receiving the special notice, the company shall immediately send a copy of the special notice to the director concerned.
- The director concerned shall be given a reasonable opportunity of being heard. He has no right to make a written representation against his removal but he can request the company to send his written representation to every member of the company.
- The company shall give notice of the intention to move the resolution, to all its members at least 7 days before the date of the general meeting. The company shall also send a copy of written representation to every member and specify the fact of written representation made by the director in the notice sent to the members.
- At the general meeting, the proposal to remove the director shall be discussed.
- If the resolution for removal of the director is passed by ordinary resolution, the director shall be removed from the office.
An Independent director can also be removed, when he is re-appointed for the second term shall be removed by the company only by passing a special resolution ( and not by ordinary resolution) and after giving him a reasonable opportunity of being heard.
Directors that cannot be removed by using this section
- The director is appointed by the Tribunal.
- The director is appointed by way of proportional representation.
- A nominee director who is appointed by any financial institution constituted under a special Act of parliament, if the provision\s contained in the special Act restricts the removal of such nominee directors by the members.
