Director of a company is a person elected by the shareholders for managing the affairs of the company as per the Memorandum of Association and Articles of Association of the company. Director in a company may need to resign or the Board of Directors or Shareholders may want to remove a Director for any reasons. In such cases, a Director can resign or be removed by filing the intimation of change of Director with MCA.
As per Section 168 of companies act 2013 a director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company:
As per Section 169 of companies act 2013 a company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard. Provided that nothing contained in this sub-section shall apply where the company 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 principle of proportional representation.
Section 169 of the Indian Companies Act, 2013 states the procedure for the removal of the director. The shareholders can remove the director by passing an ordinary resolution in a general meeting.
This right cannot be taken away by the MOA, AOA, or any document or any agreement.
The procedure For Removal of director to be followed is as follows:
Step 1: Preparing and submission of the Resignation Letter of the resigning Director
The Director intending to resign, may resign from a company by giving a notice in writing to the company and the Board is required to intimate the ROC of such notice within 30 day. The director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.
Step 2: Acceptance to the resignation by passing the resolution
The company shall on receipt of such notice, Take note of the same by passing a board resolution to that effect and a letter must be sent to the resigning Director that his/her resignation letter has been received. Company is also required to Place the Fact of Such Resignation in the Report of Directors laid in the immediately following general meeting by the company.
Step 3: File the Form DIR-11 for Notice of resignation with ROC
Where a director resigns from his office, he shall within a period of thirty days from the date of resignation, forward to the Registrar a copy of his resignation along with reasons for the resignation in Form DIR-11 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.
Step 4: File the Form DIR-12 for return of change in the Board of the Company
Once the company receives the resignation letter, and the Chairman of the Board has noted it,. The Company must also file with the ROC e-Form DIR-12 about the resignation of the Director from the Company.
Once, the ROC is informed, in the subsequent Board Meeting, the letter of resignation of the Director is placed before the Board and that fact would be recorded in the minutes of the meeting.
While carrying change in the board of directors, the company must obtain consent from its Board and members, as required by passing a resolution. Further, the care must be taken that the number of directors does not fall below the statutory limit after removal or resignation.
Yes, a director can voluntarily resign. The notice of resignation must be served to company stating reason of resignation. Also, the resigning director needs to file a form for intimation to MCA about his resignation from company.
There is no requirement to subscribe the shares by the director. However, if the Articles (AOA) of the company prescribe for any such subscription, it must be fulfilled as a condition for his appointment
No, even after the end of the tenure as director, a person can hold the shares in the company. However, if the shares in the company are subscribed as a condition to appointment as provided by AOA, the shares are also required to be disposed of in the manner provided in AOA.
The shares of the company shall be transferred by way of executing the Share Transfer deed and by affixing the stamps as per the rates mentioned in the Stamp Act of the concerned State after the change.
