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Director Removal

Directors are very crucial for any company. There is some time when we need to remove the directors for some specific reasons, the reasons we will discuss later. The authority whoever appoints the director has the authority to remove the director after following a particular procedure provided by the companies act,2013.

Reasons for removal of the director

These are the following reasons for removal of the directo
  1. If disqualified under Section 164 of the companies Act the director need to be removed
  2. If the director declared as Unsound mind or mentally unfit by the competent authority
  3. If the director dies during his tenure
  4. If the director fails to attend any board meeting for 12 months continuously, he or she will be removed under Section 167(1)(b)
  5. If the director will be involved in any fraudulent activities he will be removed
  6. If the director enters into contracts or relationships that compete with or harm the company’s interest he will be removed
  7. A court or tribunal may order the removal of a director in case of fraud, oppression, or mismanagement.

How to remove the director?

  • Voluntary Resignation – the director might resign by himself after filing the mandatory form.
  • Absence from Board meeting – If the director fails to attend any board meeting for 12 months continuously, he or she will be removed under Section 167(1)(b)
  • By Shareholders of the company
  • By the order of the Tribunal or court

Mandatory removal of the Director

In the following cases removal of the director is mandatory:
    1. Disqualification under Section 164
    2. Vacation of Office under Section 167
      • Non attendance of office for 12 months
      • Disqualification under section 164
      • Convicted or sentenced imprisonment for ≥ 6 months
      • Disqualified or removed by a court or tribunal order
      • In case of amalgamation, dissolution, or winding up of the company
      • Participated in related-party transaction that violates the Section 184
    3. Death or mentally incompetent
    4. Violation of terms mentioned in Article of Association or Shareholders Agreements

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