Removal of Directors – Tax India Firm

Removal of Directors:

Removing a director from a Private Limited Company is a sensitive yet sometimes necessary decision. Whether due to resignation, non-compliance, or shareholder vote, the removal must follow the rules set out in the Companies Act, 2013. Ensuring that the correct legal procedure is followed helps avoid penalties and maintains the company’s compliance with statutory norms. A director can be removed voluntarily or compulsorily depending on the circumstances and the provisions outlined in the company’s Articles of Association and Indian corporate law.

Overview of Removal of Directors

Types of Director Removal

A director may be removed in three main ways:

Voluntary Resignation – When the director submits a resignation.
Automatic Disqualification – If the director fails to attend board meetings for 12 months.
Shareholder-Initiated Removal – Through a resolution passed in a general meeting by shareholders.

Each process has defined steps and documentation requirements, which must be followed to update the Ministry of Corporate Affairs (MCA) database accurately.

Documents Required for Director Removal

Passport-size photograph

Self-attested PAN card copy

Address proof (Aadhar card, passport, voter ID, etc.)

Resignation letter (in case of voluntary resignation)

Digital Signature Certificate (DSC) of the outgoing director

Contact number and email ID of the director

Proof of dispatch and any acknowledgement

Apostilled documents (for non-resident directors)

Process of Removing a Director in India

Voluntary Resignation

Conduct a Board Meeting with 7 days’ prior notice.
Record the resignation in the board meeting and pass the necessary resolution.
The resigning director must file Form DIR-11.
The company must file Form DIR-12 with the Registrar of Companies (ROC) along with the resignation letter and resolution.
Once processed, the director’s name will be removed from the company’s master data on the MCA portal.

Failure to Attend Board Meetings

As per Section 167 of the Companies Act, if a director is absent from all board meetings for 12 months, they are deemed to have vacated the position.
File Form DIR-12 to notify ROC and complete removal.
MCA will update records accordingly.

Removal by Shareholders

Convene a board meeting and pass a resolution to call a general meeting.
Issue 21 days’ notice to all shareholders.
Hold a general meeting, allow the director to respond, and pass an ordinary resolution.
File Form DIR-12 along with necessary resolutions and attachments.
Once approved, the director’s name will be removed from MCA records.

Importance of Complying with the Process

Following proper legal procedure for director removal ensures:

Protection against legal disputes
Maintenance of regulatory compliance
Clear and updated company records with MCA
Transparency in corporate governance

Benefits of Formal Removal

Avoids penalties under the Companies Act
Clarifies internal leadership structure
Helps resolve internal disputes legally
Ensures better accountability and compliance

Consequences of Failing to File Form DIR-12

Form DIR-12 must be submitted within 30 days of the resignation or removal date. Delays can result in escalating penalties:

Within 60 days: Double the government fees
Within 90 days: Four times the government fees
Beyond 90 days: Ten times the government fees

After 180 days: Twelve times the fees and classification as a compounded offence

Conclusion

Removing a director from a Private Limited Company is a structured legal process governed by the Companies Act, 2013. Whether due to resignation, disqualification, or a shareholder vote, it’s essential to file the right forms—particularly Form DIR-12—within the timeline. Staying compliant ensures smooth corporate operations and avoids costly penalties or reputational damage.