Introduction: Every Corporate requires proper management to run their business. The same rule applies on the Private and Public Limited Companies. In the companies, we appoint directors who act on the behalf of company for the welfare of shareholders. The shareholders elect the directors of a company for managing the affairs of the company in accordance with the various provisions of Companies Act 2013. The Board of Directors or shareholders can also have power to remove the director of a Company under section 169 of the Companies Act, 2013.
Applicability:
This section applies on the all types of director except the director which is appointed by tribunal or the companies, whose articles provides that the appointment of director is to be made as per the provisions of section 163 of proportional representation where not less two third of the total number of Directors.
Provisions:
1. A company simply by passing ordinary resolution removes a director on his position before expiry of the period of his office after giving him a reasonable opportunity of being heard. Proviso: An independent director who was re-appointed for second term under section 149(10) shall be removed by the company only by passing a special resolution and after giving him a reasonable opportunity of being heard:
2. A special notice shall be required of any resolution, to remove a director under this section, or to appoint somebody in place of a director so removed, at the meeting at which he is removed.
3. On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director concerned, and the director, whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting.
After the receiving of the notice of the resolution, this notice has to send immediately to the concerned director and other directors which are a member or non-member of the board of the company and those are required to be heard of resolution at the meeting.
In laymen language, after convening a board meeting of director for passing resolution for removal of director, company calls the extra ordinary general meeting and sends a special notice to the members of the company at least 14 days before the date of meeting in which they specify their intention for removal of director.
A special notice required to be given to the company shall be signed, either individually or collectively by such number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not more than five lakh rupees has been paid up on the date of the notice.
4. Where notice has been given of a resolution to remove a director under this section and the director concerned makes with respect thereto representation in writing to the company and requests its notification to members of the company shall, if the time permits it to do so
(a) in any notice of the resolution given to members of the company, state the fact of the representation having been made; and
(b) send a copy of the representation to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representation by the company),
and if a copy of the representation is not sent as aforesaid due to insufficient time or for the company’s default, the director may without prejudice to his right to be heard orally require that the representation shall be read out at the meeting:
Removing director also has a right to give its representation in writing and request the company to send the same to the members of the company. If the time of sending such letter has been elapsed, director can also present the same in the meeting orally.
Proviso:
Copy of the representation need not be sent out and the representation need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure needless publicity for defamatory matter; and the Tribunal may order the company’s costs on the application to be paid in whole or in part by the director notwithstanding that he is not a party to it.
4. A vacancy created by the removal of a director under this section may, if he had been appointed by the company in general meeting or by the Board, be filled by the appointment of another director in his place at the meeting at which he is removed, provided special notice of the intended appointment has been given under sub-section (2).
5. A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not been removed.
6. If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy in accordance with the provisions of this Act:
Proviso:
That the director who was removed from office shall not be re-appointed as a director by the Board of Directors
(8) Nothing in this section shall be taken—
(a) as depriving a person removed under this section of any compensation or damages payable to him in respect of the termination of his appointment as director as per the terms of contract or terms of his appointment as director, or of any other appointment terminating with that as director; or
(b) as derogating from any power to remove a director under other provisions of this Act.
Disclaimer: –The above mentioned article has been based on relevant provisions of Companies Act, 2013. Under no circumstance, the author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.
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