A company can remove a director before the expiry of their term under Section 169 of the Companies Act, 2013. The removal requires a special resolution of the shareholders, and the director has a right to be heard.
The special resolution
The removal must be approved by a special resolution, which requires at least 75% of the votes cast in favour. The resolution must be passed at a general meeting. The notice of the meeting must contain the intention to remove the director.
The 14-day notice
The company must give at least 14 days' notice to the director before the general meeting. The notice must state the intention to remove the director and the reasons. The director has the right to make a representation, which must be included in the notice to the shareholders.
The director's right to be heard
The director has the right to attend the general meeting and to be heard. The director can also request that the representation be circulated to the shareholders. If the representation is not circulated, the director can require it to be read out at the meeting.
The exceptions
A director appointed by the Tribunal or by the Central Government cannot be removed under Section 169. A director appointed under Section 242 (oppression and mismanagement) also cannot be removed under this section.
The practical points
The company should give the 14-day notice, include the reasons and circulate the director's representation. The special resolution must be passed, and Form MGT-14 must be filed. The company should update the register of directors and file DIR-12 within 30 days.
Call to Action: We advise companies on director removal, special resolutions and MGT-14 filings. For a removal review, contact office@anujdesaiassociates.com, Ph No. 9619456656, Website https://anujdesaiassociates.com, LinkedIn linkedin.com/in/ca-anuj-desai-122547230.