The directors of the company are the trustees of the company. Directors act on the basis of resolutions made at directors' meetings and derive their powers from the corporate legislation and from the company's articles of association.
The powers to remove directors have been conferred to the shareholders. The shareholders hold a legal right to remove a director in the general meeting by passing an ordinary resolution. This legal right of the shareholders can never be taken away or damaged by the memorandum of association or article of association or any documents or agreement.
Procedure for removal of directors
Following is the procedure to be followed in order to facilitate the removal of directors of company-
- A special notice reflecting the intention of the shareholders of the company to pass the resolution for the removal of directors shall be filed by the shareholders with the company at least 14 days prior to the meeting at which it is to be moved. The number of days shall be counted excluding the day on which notice is served and the day of the meeting.
- As soon as the company received the notice it is required to give the notice to the members of the company. The notice must be given in the same manner as it is given for conducting the meeting.
- The company may also give the notice to the members by publishing an advertisement in the newspaper having an appropriate circulation not less than 7 days before the meeting in case it is unable to give notice to all the members.
- A requisition can be made by the director who is proposed to be removed against his removal and he can make a request to the company for notifying it to the company. If the representation is made within the appropriate time and is of reasonable length then the company must mention the fact that the representation has been received at the meeting. Further, the copy of the representation must be sent to every member along with the notice of the meeting.
In case the company is unable to send the representations to members then the representations must be read out at the meetings if the directors require so.
- The general meeting shall be convened to discuss the matter relating to the removal of directors and for passing an ordinary resolution regarding the same.
- In case the company is the listed company then the copy of the proceeding of the general meeting shall be filed in the stock exchanges where securities of the company are listed.
- Within 30 days of passing the resolution E- form DIR-12 for the removal of directors shall be filed with the registrar of companies.