How do members remove a director?
Members remove a director by an ordinary resolution under section 169, after a special notice. The director has a right to be heard. The board does not pass the removal. A resignation, which is the director’s own notice, is a different step.
Who can remove a director?
The company may, by ordinary resolution, remove a director before the end of the term. That power stands even if the articles are silent. It does not apply to a director appointed by the Tribunal under section 242. It also does not apply to a company that has adopted proportional representation for the appointment of directors under section 163.
An ordinary resolution passes when the votes cast for it exceed the votes cast against it. It is not a special resolution. Disqualification, which vacates the office under section 167, is a different event and is explained on the disqualification page.
What notice is required?
A special notice is given to the company at least fourteen days before the meeting. The members who give it hold at least one per cent of the total voting power, or shares on which at least ₹5 lakh has been paid up. The company sends a copy to the director at once, and gives its members notice of the resolution in the same way it gives notice of the meeting.
The director may be heard at the meeting and may send a representation. If the representation arrives in time, the company sends it to the members. The board calls the general meeting. It does not replace the members’ vote.
The same meeting can appoint another director if special notice of that appointment was also given. The new director holds office for the rest of the term the removed director would have served. The removed director is not brought back as a casual vacancy.
What is filed afterwards?
The company files Form DIR-12 within 30 days of the cessation. The ordinary resolution is not filed in Form MGT-14. The forms for an appointment and a resignation are on the DIR-12 page. A director who leaves by notice, rather than by this vote, follows the resignation page.
Where this chapter is defaulted and no other penalty is provided, section 172 applies. The company and every officer in default are liable to a penalty of ₹50,000, and a further ₹500 for each day the failure continues, capped at ₹3 lakh for the company and ₹1 lakh for an officer.
Frequently asked questions
Four questions cover the kind of resolution, the board, MGT-14, and a Tribunal appointee.
Is the removal a special resolution?
No. Section 169 uses an ordinary resolution. Votes in favour have to exceed votes against, among members present and voting.
Can the board remove the director instead?
Not under section 169. The members remove the director. The board’s role is to call the general meeting after the special notice.
Is Form MGT-14 filed?
No. The ordinary resolution under section 169 is not a resolution that section 117 sends to the Registrar in MGT-14. The cessation is Form DIR-12.
Can a Tribunal appointee be removed this way?
No. Section 169 does not apply to a director appointed by the Tribunal under section 242, or where the company uses proportional representation under section 163.
Sources
Removal is section 169 of the Companies Act, 2013. The special notice is section 115. A default in that chapter, where no other penalty is provided, is section 172.