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By :-
Uttma Shukla &
Mohini Agrawal
A director of a company can be
removed by

   1. Shareholders

   2. Central Government

   3. CLB/Tribunal
Removal by shareholder :

Section 284 empowers the company to remove a director by
ordinary resolution before the expiry of his period of office except
in the following cases:

• A director appointed by the central government under section
408.

• A director in case of a private company, holding office for life on
the 1st day of April 1952. (A director for life subsequent to that
day may be removed).

• Director appointed in accordance with the principal of
proportional representation, under section 265. This is to ensure
that the directors appointed by the minority are not removed by a
bare majority.
Procedures to be followed for removing director by shareholders:

1. Special notice – For removing a director a special notice should
   be obtained from a member proposing an Ordinary Resolution
   for removal.

2. Intimate the director – Send the copy of special notice to the
   director to be removed.

3. Notices for General Meeting – Notices to be issued for
   conducting a General Meeting at least 21 days before the
   meeting stating about the special notice and proposing the
   Ordinary Resolution for removal.

4. Representations made – If any representation has been made
   by the director concerned, it should also be stated in the notice
   and the copy of representation to be enclosed. If representation
   has not been given to all the members, director can request to
   read out such representation in the meeting.
5. Opportunity of being heard – The director also has the right to be
   heard at the meeting.


6. Pass resolution – Pass the resolution and remove the director of
   the company.


7. Inform the ROC – The Company shall within 30 days from the
   removal of a director file Form No.32 and a copy of the resolution
   with the Registrar.


8. Penalty – If default is made on complying with the aforesaid
   requirements, the company and every officer in default shall be
   punishable with a fine of up to Rs. 500 for everyday during which the
   default continues.
Removal by the Central Government


The companies act enables the central government to remove
managerial personnel (including a director) from office on the
recommendation of the high court. The central government may refer
to the high court cases against managerial person on any of the
ground mentioned in section 388-B. Every such reference will be made
in the form of an application which must contain a statement of
material facts. The person against whom such reference is made must
be joined as a respondent to the application.
At the conclusion of hearing of the case, the high court shall
record its decision stating specifically whether or not the
respondent is a fit and proper person to hold the office of
director. If the finding of the high court is against the
respondent the central government shall by order remove
such a person from office.


The person who is so removed cannot hold office of a director
for a term of five years unless the period is remitted. The
person removed cannot claim any compensation for loss or
termination of office.
Removal of director by CLB/Tribunal

Regarding oppression and mismanagement under section 397/398
the CLB/Tribunal has the power to reconstitute the Board of a
company by removal of director.

On an application to the court for prevention of oppression and
mismanagement the court may terminate or set aside or modify
any agreement between the company and the managing director,
or any other director or manager. On such termination, the
director cannot serve the company in a managerial capacity for a
period of five years from the date of the order of termination,
without the permission of the court. The director on removal
cannot sue the company for damages or compensation for loss of
office.
THE END
THANK US

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Removal of directors

  • 1. By :- Uttma Shukla & Mohini Agrawal
  • 2. A director of a company can be removed by 1. Shareholders 2. Central Government 3. CLB/Tribunal
  • 3. Removal by shareholder : Section 284 empowers the company to remove a director by ordinary resolution before the expiry of his period of office except in the following cases: • A director appointed by the central government under section 408. • A director in case of a private company, holding office for life on the 1st day of April 1952. (A director for life subsequent to that day may be removed). • Director appointed in accordance with the principal of proportional representation, under section 265. This is to ensure that the directors appointed by the minority are not removed by a bare majority.
  • 4. Procedures to be followed for removing director by shareholders: 1. Special notice – For removing a director a special notice should be obtained from a member proposing an Ordinary Resolution for removal. 2. Intimate the director – Send the copy of special notice to the director to be removed. 3. Notices for General Meeting – Notices to be issued for conducting a General Meeting at least 21 days before the meeting stating about the special notice and proposing the Ordinary Resolution for removal. 4. Representations made – If any representation has been made by the director concerned, it should also be stated in the notice and the copy of representation to be enclosed. If representation has not been given to all the members, director can request to read out such representation in the meeting.
  • 5. 5. Opportunity of being heard – The director also has the right to be heard at the meeting. 6. Pass resolution – Pass the resolution and remove the director of the company. 7. Inform the ROC – The Company shall within 30 days from the removal of a director file Form No.32 and a copy of the resolution with the Registrar. 8. Penalty – If default is made on complying with the aforesaid requirements, the company and every officer in default shall be punishable with a fine of up to Rs. 500 for everyday during which the default continues.
  • 6. Removal by the Central Government The companies act enables the central government to remove managerial personnel (including a director) from office on the recommendation of the high court. The central government may refer to the high court cases against managerial person on any of the ground mentioned in section 388-B. Every such reference will be made in the form of an application which must contain a statement of material facts. The person against whom such reference is made must be joined as a respondent to the application.
  • 7. At the conclusion of hearing of the case, the high court shall record its decision stating specifically whether or not the respondent is a fit and proper person to hold the office of director. If the finding of the high court is against the respondent the central government shall by order remove such a person from office. The person who is so removed cannot hold office of a director for a term of five years unless the period is remitted. The person removed cannot claim any compensation for loss or termination of office.
  • 8. Removal of director by CLB/Tribunal Regarding oppression and mismanagement under section 397/398 the CLB/Tribunal has the power to reconstitute the Board of a company by removal of director. On an application to the court for prevention of oppression and mismanagement the court may terminate or set aside or modify any agreement between the company and the managing director, or any other director or manager. On such termination, the director cannot serve the company in a managerial capacity for a period of five years from the date of the order of termination, without the permission of the court. The director on removal cannot sue the company for damages or compensation for loss of office.