Removal of Directors by members of the Company u/s 169 of Companies Act, 2013

Section 169 of Companies Act, 2013 talks about removal of a director by members.

Section 169(1)

1. Ordinary resolution is required to remove a director;
2. Director appointed by Tribunal under section 242 shall not be removed;
3. Independent director if reappointed for second term shall be removed by Special Resolution only.
4. 169(1) not apply if directors are appointed under section 163 i.e. according to principle of proportional representation.

Section 169(2)

A special notice is required for a resolution to remove a director or to appoint somebody in his place.

Section 169(3)

Company shall send the Special notice along with resolution of removal to director and an opportunity of being heard is given to him at the meeting.

Section 169(4)

1. If concerned director want to make representation, he shall give it in writing to the company and request to notify it to the members.
2. Company shall state in Notice that representation is made and sent the representation along with Notice to the members.
3. If copy is not sent due to insufficient time or company’s default, representation shall be read out at the meeting.
4. Company shall not send the representation and shall not read it out at meeting if Tribunal is satisfied that right given under this section shall abused to secure needless publicity for defamatory matter.

Section 169(5)

Vacancy created by the removal of director can be filled by appointment of another director at the same meeting if special notice is given under section 169(2).

Section 169(6)

Director so appointed in place of removed director can hold the office till the date up-to which removed director would have held office if he had not been removed.

Section 169(7)

1. If vacancy is not filled at the same meeting, then it shall be filled as casual vacancy.
2. Director removed cannot be re-appointed as director to fill the casual vacancy.

Section 169(8)

1. Director removed shall be entitled to compensation as per the terms of contract or terms of his appointment, if any.
2. Director can be removed under any other provisions of this act.

Rule 79 of NCLT Rules, 2016

The Company or any other person who claims to be aggrieved may make an application to the Tribunal in Form NCLT-1.

Checklist to remove director by members

1. Special notice and requisition sent by the member(s), holding not less than 10% of paid-up share capital of the company as on date, to Board of Directors u/s 100(2) of Companies Act, 2013.

2. Board shall issue Notice with explanatory statement u/s 102(1) of Companies Act, 2013 for calling EGM.

3. If Board fails to call EGM then Shareholders shall call the EGM after the expiry of 45 Days but within 90 days, from the date to receipt of the special Notice and Requisition by the Board of Directors.

4. Serve a copy of special notice of removal to the concerning director.

5. Held EGM and pass Ordinary Resolution to remove the concerned Director.

6. File Form DIR-12 within 30 days from the date of General Meeting with following attachments:

• Special Notice of the Shareholders proposes to remove the Director.
• Notice of General Meeting with explanatory Statement.
• Copy of ordinary Resolution passed at EGM.
• Notice sent to director concerned.
  

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RELEVANT FORMATS

Special Notice

Date: ……………………….

The Board of Directors

(Name of the Company)

(Address)

Dear Sir,

Sub: Issue of Requisition pursuant to Section 100 and other related provisions of the Companies Act, 2013 to convene an Extra-ordinary General Meeting of (Name of the Company).

Dear Sir/Mam

I/We, the undersigned shareholder(s) of (Name of the Company) (the Company) holding, as on the date hereof, (Number of Shares) Ordinary Shares aggregating to (% of Shareholding) of the Company’s voting capital, pursuant to Section 100 and other related provisions of the Companies Act, 2013, require you to forthwith proceed to duly convene an Extra-ordinary General Meeting (EGM) of the Company for the purpose of passing the following resolutions:

Item No. 1

REMOVAL OF (NAME OF THE DIRECTOR) AS DIRECTOR:

To pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 169 and other applicable provisions of the Companies Act, 2013 and the Rules framed thereunder, (Name of the Director) (DIN: ………………………) be and is hereby removed from the office of Director of the Company with effect from the date of this meeting.”

Your faithfully

For (Name of the Company)

(Name of the Director)

Director

DIN:                                                    

Date:

Place:

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Intimation Letter to the concerned Director

Date:

To

Name of the Director (DIN: )

Director of (Name of the Company)

Address:

Dear Sir,

I enclose a copy of the notice, which has been received by the Company from its member(s), required a resolution to be proposed at the EGM of the Company for your removal pursuant to the provisions of section 169 of the Companies Act, 2013.

In case you intend to make representations against the resolution for your removal, I request you to send the representations so as to reach us by (date) so that it may be circulated to the members of the Company. In the event, the representations are not received by the aforesaid date, the same may be read out at the EGM.

Kindly acknowledge the receipt of letter for our reference and record.

Yours faithfully,

For, (Name of the Company)

(Name of the Director)

Director

DIN:  

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Resolution on Board of Directors to issue Notice of EGM

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF THE (NAME OF THE COMPANY) HELD ON (DAY AND DATE) AT ITS REGISTERED OFFICE, (ADDRESS OF REGISTERED OFFICE), AT (TIME). 

1. NOTICE OF EXTRAORDINARY GENERAL MEETING

“RESOLVED THAT an Extraordinary General Meeting of the members, be conveyed on the requisition of shareholders under section 100 and other related provisions of the Companies Act, 2013 on (Day and Date) at (Time) at (Address of the registered office) to transact the business specified in the Notice along with Explanatory Statement placed before the Board and (Name of the Director), Director is hereby authorised to do all incidental and necessary acts for convening and holding the Extraordinary General Meeting of the Company.”

For, (Name of the Company)

Name of the Director

Director

DIN:  

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NOTICE 

Notice is hereby given that an Extraordinary General Meeting (EGM) of (Name of the Company), on the requisition of (Name of the person/company who made the requisition), which holds (% of Shareholding) of the Company’s voting capital, will be held on (Day and Date) at (Time) at (Address of the registered office) to transact the following business:

SPECIAL BUSINESS

Item No. 1

REMOVAL OF (NAME OF THE DIRECTOR) AS DIRECTOR:

To pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 169 and other applicable provisions of the Companies Act, 2013 and the Rules framed thereunder, Name of the Director (DIN:) be and is hereby removed from the office of Director of the Company with effect from the date of this meeting.” 

For, (Name of the Company)

Name of the Director

Director

DIN:

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ANNEXURE TO THE NOTICE 

Explanatory Statement pursuant to Section 102(1) of the Companies Act, 2013

Item No. 1

(Name of the person/company who made the requisition) is the Shareholder of (Name of the Company) (‘the Company’) and holds (Number of Shares) Ordinary Shares aggregating to (% of Shareholding) of the Company’s voting capital. (Name of the person/company who made the requisition) has sent to the Company a Special Notice and Requisition dated (Date) for convening an EGM, to consider and if thought fit, to pass an Ordinary Resolution for removal of (Name of the Director), Director of the Company.

(Name of the Director) is currently acting as Director of the Company. He was appointed as Director of the Company on (Date).

(Reason for removal)

Note: As the meeting has been convened at the requisition of shareholders no Explanatory Statement under Section 102 of the Companies Act, 2013 is required to be annexed with the notice. The notice received from requisitionist is annexed herewith and the reasons for convening the present meeting and moving the proposed resolutions are stated therein.

For, (Name of the Company)

Name of the Director

Director

DIN:  

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CERTIFIED TRUE COPY OF RESOLUTION PASSED IN THE EXTRA ORDINARY GENERAL MEETING OF MEMBERS OF (NAME OF THE COMPANY), HELD ON (DAY AND DATE), AT ITS REGISTERED OFFICE SITUATED AT (ADDRESS OF REGISTERED OFFICE) AT (TIME). 

Item No. 1

REMOVAL OF (NAME OF THE DIRECTOR) AS DIRECTOR:

To pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 169 and other applicable provisions of the Companies Act, 2013 and the Rules framed thereunder, Name of the Director (DIN:) be and is hereby removed from the office of Director of the Company with effect from the date of this meeting.” 

For, (Name of the Company)

Name of the Director

Director

DIN: