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Removal of Directors…


Removal of Directors:

A company is owned by its shareholders and belongs to them even though if a shareholder holds a single share. On the other hand, directors are like employees of a company who may or may not hold any shares of the company. They are answerable to the shareholders. You can removal of directors of a Company.

As per Section 169 of Companies Act, 2013 a director can be removed by the shareholders in a general meeting by passing an ordinary resolution. The right is bestowed upon the shareholders by the Act and cannot be barred by the Articles of Association or any such document.

However, shareholders cannot remove a director appointed by the Tribunal under section 242 of the Act before expiry of his tenure. Such a director is appointed by the Tribunal as its representative to prevent mismanagement in a company. The right of removal is not available to shareholders of the company which has availed the option not to appoint independent directors as per the principle of proportionate representation.

Special notice

To remove a director, a special notice is to be sent to the company stating the removal of a director and appointment of new one in his place. According to Section 115 of the Act, not every shareholder can send such a notice. The right is reserved for shareholders who hold 1% or more voting rights or hold shares up to a value of ₹5 lacs or more and they have been fully paid up as on the date of notice.

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The shareholders also have the right to decide the date of meeting. Such meeting should be held after completion of at least 14 clear days from the date of notice but must br before expiry of 3 months from date of notice.

Intimation to director

Once the company receives the special notice, it will forward a copy to the concerned director. The director has the right to make a representation in writing and send it to all the members of the company. He also has a right to being heard in the concerned General Meeting.

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