A Company May, remove a director except the director appointed by NCLT u/s 242, before the expiry of the period of his office after passing ordinary resolution

Provided that independent director re-appointed for second term u/s 149 shall be removed by company only by passing special resolution after giving him reasonable opportunity of being heard .

Further company has availed itself of the option given to it u/s 163 to appoint not less than two thirds of the total numbers of directors according to the principle of proportional representation

A special notice is required of any resolution, to remove director or to appoint somebody in place of director so removed at the meeting at which he is removed.

On receipt of notice of resolution to remove the director under this section the company shall immediately send copy thereof to director concerned

The director shall be entitled to be heard on the resolution at the meeting

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 notifications to members of the company shall if the time permits to do so in any notice of the resolution given to the members of the company, state the fact of representation having being made

Then copy of representation is send to every member

If copy of representation is not being send due to insufficient time or company’s default the director can read its representation during the meeting

When the copy is not send out and representation is not read out at the meeting on the application either of the company or of any other person who claims to be aggrieved, tribunal is satisfy that the rights are abused to secure needless publicity  for defamatory matter

Tribunal may order the company cost on the application to be paid in whole or in part by director notwithstanding that he is not party to it.

A vacancy created by a removal of director under this section if he had been appointed by the company in general meeting or by board be filled by appointment of another director in his place at the meeting at which he is removed ,provided special notice of the intended appointment has given under section (2)

A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not be removed.

Further if vacancy is not filled it may be filled as casual vacancy

Provide that director who is removed from office shall not be reappointed as a directors by the board.

A director who holds 99% of the shares, is a powerful director, and can remove the directors holding 1% non-consenting director for the smooth running of the business.

However, care and diligence ought to be exercised if onewants to invoke the above provisions to remove a director. Otherwise, it will result in unnecessary legal battle between the parties

Author Bio

Qualification: CS
Company: KHUSHBOO PATODI & ASSOCIATES
Location: INDORE, Madhya Pradesh, India
Member Since: 29 Apr 2021 | Total Posts: 5

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