Director Removal Process: Legal Framework & Compliance Guide
Learn the legally compliant procedure to remove a company director under the Companies Act, 2013. Understand rights, resolutions, filings, and timelines to ensure governance restructuring is transparent and effective.
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Overview
Director removal is a crucial mechanism for ensuring responsible corporate governance. Under the Companies Act, 2013, directors may be removed due to non-performance, legal violations, or criminal convictions. This process ensures the company operates in a compliant, efficient, and transparent manner. Legal Basis: The relevant statutory provisions include Sections 169 (Removal of Director), 167 (Vacation of Office), and 168 (Resignation) of the Companies Act, 2013.
Improved Governance
Enhances board accountability and operational integrity.
Regulatory Compliance
Helps companies avoid penalties up to ₹5 lakh for non-compliance.
Conflict Resolution
Addresses and settles boardroom disputes efficiently.
Strategic Alignment
Allows restructuring of the board to align with evolving business goals.
Step 1: Initiation
• A special notice is issued by shareholders at least 28 days before the meeting.
• The board must pass a resolution for calling an EGM within 7 days.
Step 2: Approval by Shareholders
• Conduct an Extraordinary General Meeting (EGM) with 21 days' notice.
• Pass an ordinary resolution by a simple majority.
Step 3: Regulatory Filings
• DIR-11: Director's resignation (if applicable) – Within 30 days
• DIR-12: Inform ROC about removal within 30 days
• MGT-14: File resolution within 30 days
Attachments Required:
• Copy of board resolution
• Resignation letter (if applicable)
• Minutes of EGM
Listicles
Eligibility to Initiate Removal
- Shareholders holding at least 1% voting power or ₹5 lakh in paid-up capital.
- Exceptions: Directors appointed by the Tribunal or the Central Government are protected.
Types of Directors and Their Removal Methods
- Independent Director: Special resolution (75% approval)
- Nominee Director: Automatic removal on transaction fulfillment
- Managing Director: Ordinary resolution + MGT-14 filing
Key Legal Provisions
- Section 169(3): Right of the director to present their case.
- Section 169(8): Director's right to contractual dues.
- Rule 79 (NCLT): Allows appeals via Form NCLT-1.
Penalties for Delay in ROC Filings
- ≤15 days: 1x standard fee
- 16–30 days: 2x
- 31–180 days: 4x
- >180 days: 10x + compounding
- Example: A standard fee of ₹1,000 becomes ₹10,000 after 180 days.
Post-Removal Compliance
- Update company records on the MCA portal within 30 days.
- Notify banks, statutory bodies, and stakeholders.
- Cancel or revoke the director's Digital Signature Certificate (DSC).
Why Choose DoStartup for Director Removal Services?
We simplify the complex legal procedure of director removal with a transparent, compliant, and efficient approach tailored to your business needs.
Our experienced legal professionals ensure the process complies with the Companies Act, 2013—minimizing risks and avoiding costly penalties.
End-to-end assistance from notice drafting to ROC filings (DIR-11, DIR-12, MGT-14)
Ready-to-use templates for resolutions, EGM notices, and resignation letters
Quick turnaround with MCA filings completed within 3–5 working days