CS Deepak Pratap Singh
A Company is governed by its Board of Directors and the Board of Directors are consist of Directors, who are human beings.
Section 149 of the Companies Act, 2013 provides that every company registered under the Act, must have a Board of Directors consisting as individuals as directors.
Section 2(10) provides that directors of a company collectively referred as Board of Directors.
Section 2 (34) provides that Director means a director appointed to the Board of a Company.
Provisions of Section 2(13) of the Companies Act, 1956 provides that the term director included a person occupying the position of director by whatever name called.
The Provisions of Companies Act, 2013 clearly specify that unless a person is appointed as a Director to the Board of Directors of a Company is not called as Director. So to be called a Director an individual should be appointed as Director to the Board of directors of a Company.
In some companies some individuals are designated as directors without appointing them as director under the applicable provisions of the Companies Act, 2013. They are not directors under the provisions of the Companies Act, 2013. So to be a directors an individual must be appointed to the Board of directors of a Company under the provisions of the Companies Act, 2013.
Removal of a Director under provisions of the Companies Act, 2013;
The provisions of Section 169 of the Companies Act, 2013 empowers the shareholders of a company to remove a director before expiry of his tenure of appointment.
But following directors cannot be removed under these provisions;
1. a director appointed by the Tribunal under provisions of Section 242 of the Act.
2. a director appointed according to the provisions of Section 163 of the Act. ( A company which has availed itself of the option given to it under section 163 to appoint not less than two thirds of the total number of directors according to the principal of proportional representation.)
3. a Nominee Directors appointed by the financial institutions governed by separate statutes promulgated by the parliament.
4. a director appointed by BIFR to govern business of the Company.
Provisions of section 169 provides a statutory right to the shareholders of a company to remove its directors and any contract or act to remove or taken over this right is void.
A director appointed for lifetime through Article of Association of the Company or by contract may be removed in the General Meeting of the Company according to the provisions of section 169 of the Companies Act, 2013.
A Special Notice is required according to the provisions of Section 115 of the Companies Act , 2013 to remove a director.
Section 115 provides that certain resolutions cannot be passed unless a Special Notice has been given for the purpose of passing such resolutions. Such a resolution may be either ordinary or special.
“Special Notice”, of a resolution means a notice of the intention to move a resolution given to the company at least 14( fourteen) days before the date of the meeting at which the resolution is to be passed.
A Special Notice can be given by such number of members holding not less than one percent of total voting power or holding shares on which such aggregate sum not exceeding Rs. 5.00 , as may be prescribed , has been paid up.
Rule 23 of the Companies ( Management and Administration) Rules, 2014 provides that;
(1) 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.
(2) The notice referred to in sub-rule (1) shall be sent by members to the company not earlier than three months but at least fourteen days before the date of the meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting.
(3) The company shall immediately after receipt of the notice, give its members notice of the resolution at least seven days before the meeting , exclusive of the day of dispatch of notice and day of the meeting , in the same manner as it gives notice of any general meetings.
(4) Where it is not practicable to give the notice in the same manner as it gives notice of any general meetings, the notice shall be published in English language in English newspaper and in vernacular language in a vernacular newspaper, both having wide circulation in the State where the registered office of the Company is situated and such notice shall also be posted on the website, if any, of the Company.
(5) The notice shall be published at least seven days before the meeting, exclusive of the day of publication of the notice and day of the meeting.
Following resolution requires Special Notice under provisions of the Companies Act, 2013;
1. a resolution at an Annual General Meeting appointing as auditor a person other than a retiring auditor or providing expressly that a retiring auditor shall not be re-appointed under section 140(4);
2. a resolution for removal of a director under provisions of Section 169 of the Companies Act, 2013;
3. a resolution to fill vacancy of the director who has been removed by the shareholders according to the provisions of Section 169(5) of the Act.
The notice must be given before 14 days before the date of the General Meeting at which it is intended to move the resolution. The notice must be delivered at the registered office of the company.
It is not necessary to give reasons in the Special Notice given to the company or company intimating the same to other shareholders. Since provisions of Section 102 relating to Explanatory Statement of the Companies Act, 2013 does not apply to Special Notice give under provisions of Section 115 of the Act.
A director against which removable proceedings is to be initiated or Special Notice received must be intimated by the Company. He has right to reasonable opportunity of being heard. A company may sent a copy of the Special Notice received to the director immediately. [ Section 169(3)]
The copy of the Special Notice must be send immediately and a proof of the dispatch of the notice must be kept by the company.
A director against whom a Special Notice is received may give his representation in writing and same will be notified by the company to the members if received well before the date of the meeting.
Section 169(4) of the Act, provides that if representation could not be sent to the members because it was received too late or because the company made a default in sending it, the company must read out the representation at the Annual General Meeting or separately if the representation is received after sending of the notice of the meeting.
If the director wishes to make an oral representation at the General Meeting , he may inform the company accordingly and Chairman of the meeting may appoint time for his /her representation at the meeting.
The Tribunal may restrain the right of a director for sending or reading his/her representation at the Annual General Meeting / General Meeting if it satisfied that the rights conferred on the director by Section 169(4) are being abuse to secure needless publicity for defamatory matter.
If the removed director has been appointed by the company in general meeting or by the Board , the vacancy created by removal may be filled by the appointment of another director in his place by the general meeting at which he is removed, provided special notice of the intended appointment has been give Section 169(5).
A director so appointed can hold office until the date up to which his predecessor would held office if he had not been removed as aforesaid Section 169(6).
The vacancy created above by removal of director may be filled as a casual vacancy under provisions of Section 161 of the Act. But the director removed under Section 169(1) of the Act, in any case cannot be re-appointed.
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Sir ,
Sec 115 of this act , 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 less than 5 lakh rupees has been paid up on the date of the notice.