Where Section 169 of the Companies Act, 2013 section 284 of the Companies Act, 1956 deals with the removal of Directors. As per Section 169 of the Companies Act, 2013, the right of the shareholder to remove a director in the general meeting through an Ordinary Resolution is a legal right. This right cannot be curtailed by any of the provision of the MOA/AOA or any other document or agreement.
Private Limited company is empowered to remove its directors before the expiry of their term, the powers of which is vested with the shareholders. This article deals with the process of removal of directors in a company. Non-compliance with any of the stipulated processes can make the decision void if appealed in a court.
There are three possible cases during the removal of a director:
Where the Director himself gives his resignation
The concerned director submits his resignation to the Board. In this case, the following steps will be taken to remove his name from the register of directors:
- The company will hold a Board Meeting by giving 7 days of clear notice (Clear notice means 21 days notice excluding the day on which the notice was sent and received.)
- When the Board meets, will discuss amongst themselves and decide whether to accept the resignation or not.
- Once the Board accepts the resignation of the director they will pass a Board resolution accepting the resignation in the following way:
- “RESOLVED THAT the resignation of <Director name> be and is hereby accepted with immediate effect <Date>. <Download Format>
- “FURTHER RESOLVED THAT the Board places on record its appreciation for the assistance and guidance provided by MR. XYZ during his tenure as Director of the Company”
- “RESOLVED FURTHER THAT directors of the company be and are hereby jointly authorized to do all the acts, deeds and things which are necessary to the resignation of an aforesaid person from the directorship of the Company
- After the passing of the resolution, form DIR – 11 has to be filed by the outgoing director along with the Board Resolution, Proof of delivery of the resignation letter and copy of the resignation letter.
- While the filing of DIR – 11 is the responsibility of the director, form DIR – 12 is the responsibility of the company which has to be filed with the Registrar of Companies along with the Resignation letter and the Board Resolution.
- After filing all the forms, the name of the director will be removed from the master data of the Company on the Ministry of Corporate Affairs website.
To remove a Director suo-moto by the Board
A Company has the authority to remove a Director by passing an Ordinary Resolution, given the Director was not appointed by the Central Government or the Tribunal.
- A Board Meeting will be called by giving seven days’ notice to all the directors. A special notice will go to the directors informing them about the removal of the director.
- On the day of the Board Meeting, a resolution for the holding of an extraordinary general meeting will be passed along with the resolution for the removal of the director subject to the approval of the shareholders.
- A general meeting will be held by giving 21 days clear notice. In the meeting, the members will be asked to vote on the matter. If the majority is in favor of the decision, the resolution will be passed.
- Before the passing of the resolution, an opportunity of being heard will be given to the director.
- After the passing of the resolution, the same procedure will be followed, and the forms DIR – 11 and DIR – 12 will be filed along with the same attachments of the Board Resolution, Ordinary Resolution.
- After the filing of the forms, the name of the director will be struck off from the Ministry of Corporate Affairs website.
In case the Director does not attend three Board Meetings in a row
As per section 167 of the Companies Act, 2013 if a Director does not attend a Board Meeting for 12 months, starting from the day on which he was absent at the first board meeting even after giving due notice for all the meetings, it will be deemed that he has vacated the office and a Form DIR – 12 will b filed on his name and his name will b removed from the Ministry of Corporate Affairs.
Consequences of not or late filing of FORM DIR-12:
If the company not filed the e-form DIR-12 within 30 days of appointment/Resignation, then penalty will be applicable as follows;
- Up to 15 Days then One time of actual Govt Fees
- More then 15 Days – 30 Days then 2 times of Actual Govt Fees
- More then 30 Days – 60 Days then 4 times of Actual Govt Fees
- More than 180 Days then 10 times of Actual Govt Fees
If company fail to file DIR 12 within 300 Days from date of passing a resolution then company need to pay 12 times of Actual Govt Fees plus Compounding offense.
DRAFTS FORMATS
- Notice Calling Board Meeting:
Date of issue of Notice
Name of Director
Address of Director
NOTICE FOR THE MEETING OF THE BOARD OF DIRECTORS OF Name of Company———————- LIMITED
Dear Mr. Name of Director,
Notice is hereby given that a meeting of the Board of Directors of the Company shall be held as per the following schedule:
Date: of Meeting
Time: of Meeting
Venue: of Meeting
The agenda for the meeting is enclosed.
You are requested to make it convenient to attend the above meeting.
For Name of company LIMITED
__________________________
Name of Director
(DIRECTOR)
DIN: ——————–
Add: of Director
- AGENDA OF BOARD MEETING:
AGENDA
AGENDA FOR THE MEETING OF BOARD OF DIRECTORS TO BE HELD ON
————DAY OF———-MONTH, 2014 AT ————-TIME OF MEETING
AT ADDRESS OF PLACE OF MEETING
- To Appoint Chairman of the meeting.
- To Grant leave of absence.
- To Confirm minutes of the previous Board Meeting.
- To ADD MORE AGENDA’S ACCORDING TO REQURIEMENT
- To give Vote of Thanks.
Signature
Name of Director
(DIRECTOR)
DIN: ——————–
Add: of Director
- ATTENDENCE SHEET OF BOARD MEETING:
DIRECTORS MEETINGS
ATTENDANCE SHEET
ATTENDANCE SHEET OF THE MEETING OF BOARD OF DIRECTORS OF M/S NAME OF COMPANY LIMITED HELD ON ———DAY OF————MONTH OF, 2014 AT REGISTERED OFFICE OF COMPANY.
NAME SIGNATURES
DIRECTORS:
- Name of Director
- Name of Director
- Name of Director
SPECIAL INVITEE:
- If any;
- LEAVE OF ABSENSE:
From:
Mr. Name of director who is on leave
Address of Director.
Date of Leave of Absence before Meeting
The Board of Directors
M/s NAME OF COMPANY LIMITED
ADDRESS OF REGISTERED OFFICE
Subject: Leave of Absence
Dear Sir,
With reference to the board meeting of the company to be held on date of mewing, it is hereby submitted that due to preoccupations, I am not in a position to attend the same. You are requested to grant the leave of absence.
Thanking you,
Name of Director who is on leave
DIN: ——————
Address of Director
- RIGHT ISSUE RESOLUTION OF BOARD MEETING:
CERTIFIED COPY OF RESOLUTION PASSED IN THE BOARD MEETING OF DIRECTORS OF NAME OF COMPANY LIMITED HELD ON ———-DAY OF—————MONTH, 2014 AT PLACE OF MEETING.
“RESOLVED THAT in pursuance of Section 62 of the Companies Act, 2013 read with The Companies (Share Capital and Debenture) Rules, 2014 the approval of the Board be and is hereby accorded to the Company to issue ————-No. of equity shares of Rs. ———— each (hereinafter referred to as new shares) of an aggregate nominal value of Rs. ———————————(Rupees in Word), for cash to the shareholders at a premium of Rs. —————(if any) per share determined by the Chartered Accountants firm, which was accepted by the Board of Directors as reasonable and in the interest of all concerned, such issue to be made on the following terms and conditions:-
- The issue of shares will be made in the proportion of one new share for every one equity share held on DATE OF MEETING.
- The said offer to the members shall be made by an offer letter which shall indicate the number of shares held by each member and the number of shares to which each is entitled as rights shares, the value per share and the total amount due in case the offer of shares is accepted in full.
- The aforesaid offer shall be valid upto the MAXIMUM 30 DAYS , and includes a right exercisable by the person to whom the aforesaid offer being made to renounce the new shares offered to him in favour of any other person.
- The offer after the expiry of the MAXIMUM 30 DAYS FROM MEETING or on receipt of earlier intimation from the person(s) to whom such notice was given that he declines to accept the new shares offered, the Board of Directors of the company be authorized to dispose of unsubscribed part of the new shares in such manner as they think most beneficial to the company.
- The Equity Shares so issued shall upon allotment have the same rights of voting as the existing equity shares and be treated for all other purposes pari-passu with the existing equity shares of the Company and that the equity shares so allotted during the financial year shall be entitled to dividend, if any, proportionately in the year of the allotment of these shares.
- The allotment of further shares to Non-Residents members shall be in accordance with the Regulations issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999.
- Share Certificates shall be issued to those to whom the further new shares are allotted within the time prescribed in the Companies Act, 2013.
RESOLVED FURTHER that the Board of Directors be and is hereby authorize to take all steps to implement the above resolutions, finalize and issue the letter of offer of rights and take all actions in connections with the further issue and allotment of shares to the members and others where applicable”.
Certified true copy
For NAME OF COMPANY Limited
________________________________
NAME OF DIRECTOR
Director
DIN:
ADDRESS OF DIRECTOR
- SHARE APPLICATION FORM:
| From: | NAME OF SHARE HOLDER
ADDRESS OF SHARE HOLDER: |
| To: | The Board of Directors,
NAME OF COMPANY, |
| ADDRESS OF REGISTERED OFFICE | |
Dear Sirs,
We hereby apply for the _________Shares of the Company, having a face value of Rs __/- per __, as stated below in BLOCK 3. We have remitted the amount specified in Block 5 being the amount payable on application @ Rs ——-/- per equity share (inclusive of share premium of Rs—————-/- per share).
We agree to accept the equity shares applied for or such lesser number as may be allotted to us by the Company subject to the terms and conditions set forth in letter of offer and mutually agreed between us and the and the Company subject to the provisions of Foreign Exchange Management Act, 1999 and the Rules /Regulations/Notifications/Guidelines issued by the Govt of India/Reserve Bank of India in this behalf and the provisions of the Companies Act, 2013 and the rules and regulations made thereunder and the provisions of the Memorandum and Articles of Association of the Company, this Application Form, Share Certificates and any other Law, Rules and Regulations and other documents as may be relevant/applicable, if any,
We undertake that we will comply with the aforesaid as may be applicable to us from time to time and will sign all such other documents and do all such other acts, deeds and things, if any, that may be necessary on our part in this regard and to enable us to be registered as the holder(s) of the equity shares which may be allotted to us by the Company. We authorize you to place our name(s) on the Register of Members of the Company as the holder(s) of Equity Share(s) that may be so allotted to us.
We hereby enclose Board Resolution authorizing the investment as give below:-
| REGD. FOLIO NO.
(BLOCK 1) |
NO. OF EQUITY SHARES HELD
AT PRESENT (BLOCK 2) |
NO. OF EQUITY
SHARE (S) APPLIED (BLOCK 3) |
AMOUNT PAYABLE
@ Rs 275/- PER EQUITY SHARE (BLOCK 4) |
AMOUNT PAID ON APPLICATION
@ Re. 275/- PER EQUITY SHARE (BLOCK 5) |
||
|
|
||||||
| Amount paid (Currency and also equivalent Rs. in Words) | ||||||
| Drawn on
(Name of Bank and Branch) |
||||||
| By Cheque / Draft / T.T.
Wire transfer / |
No. | Dated | ||||
| Payable at/transferred to
(Name of Bank and Branch) |
||||||
____________________________________
SIGNATURE (with Company stamp/seal)
Specimen signature of applicant
- REJECTON FROM EXISTING SHARE HOLDER:
Date: (______) (14th May onwards)
The Board of Directors,
Name of Company,
Register office address of company
Subject: Non-acceptance of offer of Right Issue made to the Company
Dear Sirs,
I received a letter of offer regarding issue of equity shares on right issue basis in proportion to one equity share for each equity share held by the me. I does not intend to accept this offer.
This is for your record and reference.
Signatur
Name of Shareholder
Address of Shareholder
- ACCEPTANCE FOR SHARHOLDER:
Name of Shareholder
Address of Share holder
Acceptance of offer letter
WHEREAS:
- I am holder of ———–equity shares of Rs———–/- each in
Name of Company. - I received a letter of offer from Name of Company regarding issue of equity shares on right issue basis in proportion to one equity share for each equity share held by the Company
- I intends to subscribe to —————- No. of Equity Shares new equity shares of of Rs.=———- each at a premium of Rs. —————— per share in the share capital of Name of Company by the me amounting to INR —————–.
- I intended to provide a capital injection of INR —————– in Name of Company after receiving the capital injection of ——————— from its other share holders.
Dated this day of
Signatur
Name of Shareholder
Address of Shareholder
- RESOLUTION FOR ALLOTMENT OF SHARES:
CERTIFIED COPY OF THE RESOLUTION PASSED IN THE BOARD MEETING OF NAME OF COMPANY HELD ON ————–DAY OF ———–MONTH ————YEAR, AT REGISTERED OFFICE AT ADDRESS OF REGISTERED OFFICE.
“RESOLVED THAT in terms of authority given to the Board by the Articles of Association of the Company, NAME OF SHARHOLDER be and is hereby allotted and issued ——————— (No. of Equity Shares) equity shares each having a nominal value of Rs——-/-(———- Only) at a price of Rs. ——————/- (Rupees ————————- Only) per share, -in lieu of subscription monies of Rs. ——————/- ———- received from it as per the details given below:
| Name of Subscriber | No. of shares | Dist. Nos. | Nominal Value | Certificate No. | Folio No | |
| From | To | Rs. | ||||
| . | ||||||
RESOLVED FURTHER THAT the above equity shares so issued and allotted Name of shareholder shall be subject to the provisions of the Memorandum and Articles of Association of the Company.
RESOLVED FURTHER THAT, a letter of allotment in relation to the above equity shares issued and allotted as aforesaid be issued to name of shareholder by the Company.
RESOLVED FURTHER THAT name of directors of company or any other Director of the Company be and is hereby authorized to do all such acts, deeds and things as may be required to be done to give effect to the above resolution, including issuance of duly stamped share certificates in relation to the above equity shares issued and allotted as aforesaid to name of shareholder in accordance with the provisions of the Companies Act, 2013 and rules made there under and the Articles of Association of the Company and do all other acts consequent to the issuance and allotment, including, in particular the payment of the requisite stamp duty, for issuing duly stamped share certificates evidencing the allotment of equity shares and give such directions as may be required, necessary, expedient or desirable for giving effect to the aforesaid resolutions.”
CERTIFIED TRUE COPY
For NAME OF COMPANY
__________________
NAME OF DIRECTOR
(Director)
DIN:
ADDRESS OF DIRECTOR
- RESOLUTION FOR SIGNATURE OF SHARE CERTIFICATE
RESOLVED FURTHER THAT the share certificates be issued under the Common Seal of the Company, under the signature of name of directors of company, Directors of the Company, and ———————————— as authorized signatory.
Author of all avobe format – CS Divesh Goyal
