A director can vacate office under Section 167 of the Companies Act, 2013. Some grounds are automatic — the director ceases to hold office immediately. Other grounds require a board decision.
The automatic grounds
A director vacates office automatically if:
- They fail to attend three consecutive board meetings without leave of absence
- They fail to attend three consecutive meetings of the board or the committee, whichever is applicable
- They become disqualified under Section 164
- They are convicted of an offence involving moral turpitude
- They fail to file the KYC for the DIN
- They are declared of unsound mind
- They become an undischarged insolvent
The board-decision grounds
Some grounds require the board to decide:
- The director has breached the provisions of the Act
- The director has acted against the interests of the company
- The director has been absent from the board meetings without leave
The filing
The company must file Form DIR-12 with the ROC within 30 days of the vacation. The company must also update the register of directors.
The practical points
The company should track the attendance of directors and the KYC status. A director who is absent for three consecutive meetings should be informed. The company should pass the board resolution and file DIR-12 within the prescribed time.
Call to Action: We advise companies on director vacation, DIR-12 filings and attendance tracking. For a director-vacation review, contact office@anujdesaiassociates.com, Ph No. 9619456656, Website https://anujdesaiassociates.com, LinkedIn linkedin.com/in/ca-anuj-desai-122547230.