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Remove a Director U/S 169 of The Companies Act, 2013 (Section 284 of the Old Act)

November 5, 2016     by Nupur Singhal

 

A special notice under section 115 of the Companies act, 2013 is required to be given by the shareholders in order to remove a director before the expiry of the tenure of his office.

  • Notice shall be given by members holding minimum 1% of the total voting power or shares on which an aggregate sum of not less than Rs. 5, 00,000 has been paid up as on the date of the notice. (Section 115 of the Companies Act, 2013)
  • The notice shall be sent not earlier than 3 months but at least 14 days before the date of general meeting.
  • The company shall give its members notice of the resolution at least 7 days before the meeting as prescribed in Rule 23 of the Companies (Management and Administration) Rules, 2014.

A vacancy caused by such removal may be filled at the same meeting provided special notice of the proposed appointment has also been given. The director so appointed shall hold office till the removed director could have held office had he not been removed. If the vacancy is not filled in, at the meeting, it may be filled in by the Board as casual vacancy. However, the director who has been removed shall not be appointed.

 

Rights Available To Director Whose Removal Is Proposed

  1. On receipt of the special notice, the company should send a copy thereof to the director to be removed.
  2. He has the right to send give representation of a reasonable length.
  3. The company is under the obligation to forward the said representation to all the members unless it is received too late.
  4. When the representation is not sent as above, the director has the right to get the representation read out in the relevant meeting.
  5. Representation made by the director shall also be filed with the Registrar when it is not sent to the members.

 

However, the company or any other person aggrieved may apply to the Tribunal not to send the representation and not to read it out in the meeting on the ground that the rights conferred by this section are being wrongly used by the director.

The provisions of Section 173(2) (now Section 102 of Companies Act, 2013) as to the explanatory statement are not applicable in respect of the resolution for the removal, because the company merely acting in pursuance of a special notice received by it to move the resolution, is not a resolution proposed by the company [Life Insurance Corporation of India v. Escorts (1986) 59 Comp Case 548 (SL)].

 

 

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