Director Removal for Absence

In my view you should pass resolution  in the Board meeting mentioning disqualification and removal of the such director and file  the requisite form with the ROC.

If you remove later after he attends (fifth meeting) the Board meeting then he may have ground aganst the Comapnay that why he allowed to attnd the Board meeting even if he declared as disqualified.

Hello Sir - 

Thank you for your kind response.

1- Does the company Act requires a resolution to be passed in such situation or it is optional ?

2- If I pass a board resolution, do I need to invite the director disqualified to a board meeting ? or we only invite remaining directors. This is where it becomes very tricky as we have technically not removed him so if we don't invite him it becomes a violation.

If it is possible to get a step by step process we should follow, it will be very helpful 

 

Wording under companies act talks about auto vacation of office as such as director if he/she cross the limit of 12 Months of not attending any board meeting with or without leave of absence ,Board will take a note of it in conclusion of that last meeting itself ,once director crosses the threshold of statutory requirement... there is no need to follow any removal process just note by director should be enough as proof of cessation ,rather than to send him 5th meeting notice inform such director by any means that his office been vacated due to non compliance of section 167... if you properly preserve record of notice sent ,delivery by approved means ,maintaing and circulation of minutes ,it will be very difficult for such director to launch management dispute..

Thank you Chirag ji. This is very helpful. We have all the proofs for this director being invited and not attending board meetings. All the minutes have been sent to him also as per the ROC process. We did capture in last minutes that he was again absent. However, we did not take a special note in minutes about him being disqualified. So if we follow a process like this:

1 - Managing Director (myself) circulates a resolution to all directors (other than the one disqualified) without a board meeting to remove under section 167 

2 - Once everyone approves files authorizes the CS to file the DIR-12 to remove 

Will this be sufficient or we should do something else here? This director is also a minor shareholder, holds 2 shares out of 10000 shares. Does that change anything?

Appreciate any guidance for the right process we should follow.

 

 

 

 

See ,the Meeting at which director continuously absent for 12 month was his last working day (just twist the language of 167 for easy understanding) now from that day he is ineligible to further participate in borad meeting and to exercise any of his director right ,he can't do any objection because evidence of cessation is at there in minutes and attendance sheet of all previous meetings , you should straight go ahead and file DIR -12 within stipulated time , it's my personal view but recording in minute is enough evidence about vacation of office of director because draft + final minutes always circulated to all directors ,in the next meeting you can just take a note of it....

If you delayed in filing DIR -12 then penalty in form of additonal fee has to be paid ..

{Disclaimer- For educational purpose only }

Dear Chirag ji - Thank you again. We are reviewing and will go ahead and file the DIR-12. Two more questions -

1- what is the stipulated time to be able to do this from the date of last meeting he did not attend?

2- If the filing gets delayed beyond this time, how much penalty is to be paid? 

3- Does any online agency like cleartax or anyone you can recommend who can file this DIR-12 for us for a small fees? My CS is not available and am thinking to use another one if needed for this.

Thanks again and really appreciate.

1)DIR -12 Should be filed within 30 days of appointment/cessation/change in designation

2) For Delayed filing of DIR -12 as said,there will be penalty in form of additonal fees which depends on period of delay ,and may go upto 12x of normal fees if delay exceeds 180 days

3) For online you have to do Google ,but it's will better if you contact/engage Local Practicing CS for it ,any n CS which having Valid Certificate Of Practice can do this ..

P.S. Normal Fees of DIR -12 is based on Paid Up Capital and Additonal fees on delay post 30 days.

I hope this information has cleared your doubts ..

Disclaimer- For Educational Purpose Only...Should not consider as professional advice..

Yes, whatever Chirag ji says is correct, as per the provision of Section 167 of the Companies Act 2013,the office of a  director shall become vacant in case if a director  absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board, SO this is case of vacation of the oofice of Director and  NOT a case of removal of the director.In case of removal of a director Resolution is required to be passed.But ihere in the case of vacation this is an automatic removal as per the Law and in such case no resolution needs to be passed only the Board will take Note on the vacation of the office of the director.

Dear Mr. Pota and Chirag ji - Many thanks for your messages and these clarificatons. We still have two more points of confusion

1 - We did not note in last board meeting on the "Vacation of Office by this Director" - Does this matter in anyway as minutes clearly specify non-attendance.

2- This Director is also a minority Shareholder (owns 4/10000 shares). Does this matter in this situation if they are shraeholder?

Regards

No ,I alreday mentioned to you that sec 167 is different from removal procedure of director as well any other disqualification which he can incur like no filing of FS etc ..you had said that director is absent from meeting which is mentioned in minute and also attendance register say about it so you can go forward and file DIR -12 and if there is any delay then you have to pay additonal filing fees which may go upto 12x of normal fees in case of delay beyond 180 days from cause of action ,( Here 30 days shall be counted from the conclusion of the meeting in which he was absent and completed 12 months )

His shareholding cannot impact this , even if he is a promoter director his office will be auto vacated due to this reason...

If you want company can send him a letter/note stating that his office have been vacated on such date ,due to non attendance in board meeting ( can give brief on Date of BM ) for continuous period of 12 Months u/s 167 read with relevant rules or Cos AOA ,so you have been vacated office on this day and DIR-12 to update ROC registry is being filed..

In next board meeting you can take note of it
or with C/R Under 175.


Disclaimer :- No responsibility shall be taken for any harm/damages / losses / litigation or any untoward incident due to answer posted on query above ,it's only for educational purpose on voluantry manner ,always consult with duly engaged professional..

Thank you Chirag ji and Mr. Pota. I will need a CS to do this DIR filing for us and we will provide all the proofs for them to proceed. Please advise if you can connect me with a CS. The company head office is in Delhi and we are registered with Delhi-ROC. Any advise on who we can leverage. I am also searching and meantime discussing with majority shareholders and other Directors. Likely we will proceed in another 2-3 weeks.