REMOVE DIRECTOR

Resignation of a Director

The reason for the director leaving a company, either the director wants to resign or the Board of Directors may want to remove the director from the company. The director of the company can resign from the board by filing a resignation letter and announcing the ROC with the same. Legaltaxpert helps the director with his/her resignation by following the required procedure

Director’s notice of resignation to the company

After giving written notice to the company a Director may resign from the company. A director can send a copy of the resignation to the ROC along with stating the reason for resignation in Form DIR-11. Check out the resignation format:

Resignation Letter Format

Date, Month, Year

To,
The Chairman / Secretary
Company Name
City, State, Pin Code

Subject: Resignation from the Office of Director of the Company

Dear Sir/Madam,

I hereby tender my resignation from the office of the Director of the ————– (Company name) with immediate effect or mention the resignation date. Notice of my resignation letter should be submitted to the Registrar of Companies and the Board of Directors should be informed in the next board meeting as conducted.

I sincerely thank all the Board of Directors for giving me this opportunity and timely assistance to discharge my duties during my tenure as a Director of the company.

I request the Board of Directors to please provide me with an acknowledgment of the resignation and a copy of the E-form DIR-12 filed with the Registrar of Companies to that effect for my reference and record.

Thanking You,

Your’s Faithful,
Name of the Director.

In Case the Director Does not Attend 3 Board Meetings in a Row


According to Section 167 of the companies Act,2013, if the director does not attend a board meeting for 12 months, from the day on which he was absent at the first board meeting, even after giving due notice for all the held meetings. It will be considered that he has vacated the office and a Form DIR-12 will be filled on his name. Also, he will be removed from the Ministry of Corporate Affairs.

Obligation on the part of the Director who is resigning from the post

A director can resign from his office by submitting a written notice or an email/letter to the Board of directors.

Within the 30 days of resignation, a copy of the resignation can be forwarded along with a detailed reason for the resignation. It is sent to the Registrar of companies in the format of Form DIR11 with the prescribed fees under the Companies Rule, 2014. A copy of the resignation should be forwarded within 30 days of signing the resignation. The effective date of resignation is the date on which the company has received the resignation or any specific date mentioned by the director. However, the effective date of resignation should be the same as the date of cessation mentioned in the form DIR 12.

Along with DIR-11, the director requires the following documents:

  • Notice of the resignation or resignation letter
  • Proof of the dispatch letter
  • Any acknowledgment document received from the company
  • Other information can be added as optional attachments

Obligations for the Company

According to the resignation notice, the resolution will be passed by the Board of Directors for accepting the resignation. It is mandatory to draft the minutes of the meeting conducted by the Board of Directors.

The Registrar should be intimated in Form DIR12 (According to Rule 15 of the companies,2014) the Board of Directors should be intimated within 30 days from the date the resignation is received.

According to rule 15 of the Companies Act, 2014, the Board of directors should announce the result of resignation within 30 days of receiving resignation. The Board of directors has to mention the resignation of the directors in the annual meeting of the company and it should also be reflected on the official website of the company.

While filing Form DIR1, the company required the following documents:

  • Notice of resignation
  • Evidence of cessation – board acceptance or resolution letter can be attached.

Resignation Acceptance Letter by the company


Date/Month/Year

To

Name of the director who has resigned
Address.

Subject: Acknowledgement of Resignation

Dear Sir/Ma’am

With reference to your resignation letter dated 20XXXX. In this regard, the Board of Directors has accepted your resignation w.e.f—, the Board meeting will be held on—–

The Board of Directors sincerely appreciates your association with the company and the support you have offered during your tenure.

We wish you all the best in your new endeavors

Thanking you,

Your Faithful,
For Company Name
Director.

Director Liability after the resignation

Once the board of directors accepts the resignation of the director, the director is not liable for any liabilities after the date of acceptance of the resignation.
But the director is still liable for any offenses that have occurred by him/her during the period of directing the company.

Director Removing Process

A company can remove the director before the expiry of his/her term. Shareholders have all the power to remove the director. Check out the director removing process below in detail:

  • Basic Requirements
    The process of director removal cannot be intimate without offering a chance to the proposed director. It is the basic prerequisite as per the law. An opportunity is given to the defaulter to make his/her point before expulsion.
  • Notice to be issued
    The director removing process should be initiated by issuing a notice. The notice should be issued by the shareholders with minimum voting power of 1% or someone who holds a share of sum Rs. 5,00,000 is paid on the notice date. The notice should be signed by all the directors. Before conducting a general meeting for passing the resolution, a notice will be delivered to the company 14 days before. The notice is not valid if not issued before three months of the conduction date of the meeting.
  • Notice to Members
    A copy of the notice should be delivered to the proposed director whether he/she is a part of the company or not. The notice should be delivered seven days before the conduction of the resolution meeting.
    If the shareholders cannot deliver the notice, it can be published in any newspaper in English and native language. Also, the notice should be posted on the company’s official website, seven days before the date of the meeting.
  • Representation in writing
    The concerned director can request the company to make a representation against the removal notice. The representation can be sent to all the members. All the members should be notified about the representation from issuing a notice. If the company cannot invite all the members, the director may request to read his/her representation.
  • Appeal from the Tribunal
    An application can be made to the tribunal if the director tries to defame the company or send unnecessary information through his/her representation. The tribunal has all right to nullify the representation process. Also, the director has the authority to claim the cost compensation of the application borne by the company.

Frequently Asked Questions

How is a director removed from a company?

The director may be vacated by statute, his or her death, or any provision related to the Articles of Association of the company or shareholders agreement.

Can you remove a company director without their consent?

Yes, a company director can be moved with any prior notice. As per Section 262 of CMA, a company can remove a director before the expiration of his office period.

What happens if all directors resign?

When a single director resigns, Companies House will inform the company to hire a new director. If the company fails to hire any director, a shareholder can conduct a general meeting to appoint a new director.

What resolution is required to remove a director?

Under Section 168 of the Companies Act 2006, shareholders can remove the director by passing an ordinary resolution (majority vote should be above 50%) in a company’s general meeting.