What is the Procedure of Removing Director from company?

Removal of director

 

Every company have right to remove director any time before the expire of his term; this power is in the hand of the company shareholders. A company is empowered to remove its directors before the expiry of their term, the powers of which is vested with the shareholders.

Opportunity of being heard

The main common law is also applicable on this. Opportunity if being heard is available to the director to whom we want to remove from the company. In this opportunity the director can explain the reason of any default done by him.

Issue of Notice

The process will start by providing notice to all shareholders for the stating the fact of removal the director in default. This notice must be served to all shareholder who have equity share not less then 1% of total issued shares; or who holds shares of which value is more than Rs 5,00,000 has been paid up on the date of this notice. And the notice must have served at least 14 days before the date of meeting of removal of director.

Notice to Director

Notice must be served to all concerned director to be removed from the company, this notice must be served at least seven days before the meeting in which opportunity of being heard to be given to the director proposed to be removed.

Alternatively, if any circumstances the shareholders are unable to serve notice due to unavoidable reasons, in such cash the notice can be published in two newspaper ( one in English and othe in local language). In addition notice should be post on the company webstien if they maintains any.

Representation in meeting

The director to whom shareholders wants to remove from the company can make representation in writing to the company, also he can ask the company to circulate the representation to all shareholder of the company. If in case company the company is unable to circulate the representation to all shareholders , the it must be read out in the meeting of the company in which removal order to be passed for the director.

Appeal to the Tribunal

If the organization or any aggrieved person decides against sending out the representation to the members or reading it out in a meeting, they can make an application to the Tribunal, requesting a nullification of the process. The Tribunal is entitled to annul the process, if it finds that the director uses this right to secure unnecessary publicity for defamatory matter.

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