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Removal of an Additional Director before AGM

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)

27 December 2009

Dear All,

Please let me know the procedure for removal of an Additional Director of a Private Limited Company before the date of AGM. He is not holding any equity share in the company and working to the detrimental of company's interest.

Please also provide the sequence of events and specimen of Special Notice u/s- 284 to be given by member, Letter to be given by company to the Additional Director, Notice of EGM and minutes of EGM.

Thanks in advance.

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10 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 28 December 2009

Originally posted by : CA.Satendar Kumar
	Dear All, Please let me know the procedure for removal of an Additional Director of a Private Limited Company before the date of AGM. He is not holding any equity share in the company and working to the detrimental of company's interest. Please also provide the sequence of events and specimen of Special Notice u/s- 284 to be given by member, Letter to be given by company to the Additional Director, Notice of EGM and minutes of EGM. Thanks in advance.

For removal of director (any kind) you have to pass an ordinary resolution u/s 284 in the general meeting and file form-32 with in 30 days of passing O.R.

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 28 December 2009

Thanks for your reply Mr. Garg, which I also knew. My queries are mainly as to the sequence of events, which are to be followed for this removal.

I am providing below the sequence of events as per my knowledge, correctness of which I request you to verify as an Expert: -

a) A member / shareholder of the company will send a Special Notice to the company for removal of the Additional Director.

· Is reason of removal to be given in the Special Notice or not?

· Is proposed Ordinary Resolution to be passed at EGM to be given or not in the Special Notice?

· Is date of proposed EGM at which this Special Notice is to be considered, also to be given by member in the Special Notice or not?

b) The company is supposed to send copy of the notice forthwith to the concerned Additional Director.

· Can this Special Notice be sent to concerned AD without calling any Board Meeting?

· Is any Board Meeting to be convened for approving the Draft Notice for calling an EGM or not?

· Is any time to be given for receiving representation from the concerned AD before issuing Notice of EGM?

· Is Representation received from AD to be attached with the Notice of EGM or can be considered straight at EGM?

c) Hold EGM and pass the Ordinary Resolution with simple majority.

· Can this EGM be called at a shorter notice (than 21 clear days) with the consent of all members or not?

· If yes, copies of consent letters are also to be attached with Form 32?

d) File Form - 32 with ROC within 30 days of the date of EGM.

Dear Ankur, if there is any missing event / link, please let me know. I shall be grateful to you if you can kindly provide me the soft copies of specimen of all the above stated documents i.e. Special Notice, Co’s Letter to AD, Notice of Board meeting (if required), Board Resolution, Notice of EGM etc.

Further, since appointment of AD was made by BOD, is there any provision whereby BOD can remove this AD without getting Special Notice from a member and without calling an EGM?

Thanks,

CA. Satendar Kumar

Email: skr_ca @ rediffmail.com

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 28 December 2009

Find attached your answer in track changes.

Attached File : 10 track changes.doc downloaded: 1209 times

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 28 December 2009

It is not necessary to give reasons in the special notice given to the company or in the company's notice to the members, or in the resolution proposed by the company's Board itself, for removal of a director.

As per LIC of India v Escorts Ltd. (1986) the provisions of section 173(2) as to the explanatory statement are not applicable in respect of the resolution for the removal, because the company is merely acting in pursuance of a special notice received by it to move the resolution; it is not a resolution proposed by the company.

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 28 December 2009

Thank you very much for your quick and to the point reply. Please provide soft copies asap.

If a director is not present in 3 consecutive meetings of BOD and there is no leave of absence, in my opinion, BOD can remove that director by passing resolution even in the 3rd meeting of BOD. Is this correct. Please clarify.

Thanks once again

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 28 December 2009

SAMPLE NOTICE TO MOVE A RESOLUTION FOR REMOVAL OF A DIRECTOR

The Company Secretary

Jairam Industries Limited

Dear Sir,

I/We, the undersigned member(s) of Jairam Industries Limited, give notice pursuant to the provisions of section 284(2) read with section 190 of the Companies Act, 1956 that I/we intend to move at the forthcoming annual general meeting/extraordinary general meeting of the Company an ordinary resolution that Mr. Ali Haider be removed from the office of director of the Company.

Yours faithfully,

Sunder Jain

SAMPLE INTIMATION LETTER GIVEN BY A COMPANY TO THE CONCERNED DIRECTOR

Mr. Ali Haider

Director of Jairam Industries Limited

Dear Sir,

I enclose a copy of the notice, which has been received by the Company from its member(s). As appears from the notice, a resolution is to be proposed at the next AGM/EGM of the Company for removal, pursuant to the provisions of section 284 of the Companies Act, 1956.

Your attention is drawn to the provisions of sub-section (4) of section 284 [copy enclosed for reference]. In case you intend to make representations against the resolution for your removal, I request you to send the representations so as to reach us by __________, so that it may be circulated to the members of the Company. In the event, the representations are not received by the aforesaid date, the same may be read out at the meeting.

Kindly acknowledge the receipt of letter for our reference and record.

Yours faithfully,

For Jairam Industries Limited

Sunder Jain

Company Secretary

SAMPLE NOTICE OF RESOLUTION TO BE GIVEN TO ALL THE MEMBERS

NOTICE is hereby given that an EGM of the company will be held on day,_______ at 10.30 A.M. at the registered office of the Company situated at _______________________ to transact the following business:—

1. To consider and, if thought fit, to pass, with or without modifications, the following resolution as an ordinary resolution, in respect of which a special notice has been received by the Company from a member(s) pursuant to section 284 read with section 190 of the Companies Act, 1956:

RESOLVED THAT Mr. Ali Haider be and is hereby removed from the office of director of the Company with effect from the conclusion of this meeting.

A written representation with respect to the resolution set out above for the removal of Mr. Ali Haider as a director have been received from Mr. Ali Haider in accordance with the provisions of section 284(4) of the Companies Act, 1956. A copy of the representations is enclosed to this notice.

By order of the Board of Directors

Date __________

Place__________ Company Secretary

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 28 December 2009

Let me tell you one more thing—If you don’t regularize him in the ensuing AGM then this would be equal to automatic vacation of office and you don’t need to pass any resolution or follow the process u/s 284. What Say???

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 28 December 2009

Originally posted by : CA.Satendar Kumar
	Thank you very much for your quick and to the point reply. Please provide soft copies asap. If a director is not present in 3 consecutive meetings of BOD and there is no leave of absence, in my opinion, BOD can remove that director by passing resolution even in the 3rd meeting of BOD. Is this correct. Please clarify. Thanks once again

In this "absence from BM case" there is no need to pass any board resolution for removal and this is a case of automatic vacation of office. Simply noting in board minutes followed by form-32 filing would be enough.

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 28 December 2009

Thanks once again for your prompt reply and specimen copies. I also knew about automatic vacation of office of Additional Director at AGM, but we do not want to wait till that time i.e. till September 2010.

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 30 April 2010

Dear Mr. Ankur,

a) In our case, the company received special notice u/s-284 of Cpmpanies Act, 1956 from one of the member of the company for removal of an additional director say Mr. A.

b) Thereafter, a meeting of BOD was convened for this purpose and notice of BM alongwith copy of special notice was also given to Mr. A, who is to be removed as AD.

c) BM held but Mr. A did not attend the meeting and also no representation was received fro Mr. A.

d) In the BM, resolution was passed for removal of Mr. A as Additional Director, subject of approval of members in the proposed EGM. The draft notice of EGM was approved and circulated to members for conducting EGM, which is to be held in mid May 2010.

Please let me know that the steps taken above are in order or not. Please also goide me whether notice of EGM is to be given to Mr. A or not?

Thanks