Removal of director of pvt. ltd. company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 November 2013 A Pvt. Ltd. company have 3 directors, who have equal number of shares. out of 3 directors, 2 of them want to remove the 3rd director who is responsible for some mismanagement in the affairs of company, so how can the two directors can proceed with the removal of 3rd directors in case the 3rd director is not willing to resign from his post not ready to transfer his shares to other two directors.

In addition to above, i have few questions like, if the 3rd director has been removed but he retain 33% shares, how we can take it back? and in bank all 3 directors are required to sign the cheque, can we remove him from bank also bcoz without that we can not process the payment to anyone.plz help.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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14 November 2013 kindly follow the procedure as given here:

http://ourprofessionalteam.com/index.php?option=com_oscontent&view=article&id=2718&catid=100&Itemid=48

two directors having more than 50% voting rights can easily remove the other director.

Yes, once you remove him from directorship, you may send communication to bank for change of authorized signatory.

With regards to buyout of shares, other experts may comment.

Querist : Anonymous

Querist : Anonymous (Querist)

16 November 2013 Thanks Mr. Nikhil for valuable reply,

I have one more query : what damage he can do in company for example he have list of all clients he may sell them to competitors or send any defame communication to clients etc, how we can protect company from this?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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16 November 2013 First you can take a preventive measures of informing all your clients of impending removal of the said director. Give them assurance of continued services and request them to kindly ignore any malicious communication from the said director.

with regards to sharing information with competitors, a lot will depend on whether there is any condition in your shareholding agreements or terms of employment regarding breach of trust and confidential data.

You may check with a lawyer for the implications and mitigation.

Querist : Anonymous

Querist : Anonymous (Querist)

16 November 2013 If Breach of trust & confidential data agreement is not present in shareholding agreement, can we do a fresh agreement on behalf of compensation, kindly guide which agreement we should do for 100% safeguard against such activities or damage to company bcoz this fellow have code of software which we developed for client and data of client and client's client?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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16 November 2013 well in that case, unless you sign a non-compete agreement and compensate him adequately, today or tomorrow, he will be able to replicate the codes anyways.

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