Removal of an Additional Director before AGM

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. 

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.

Find attached your answer in track changes.

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.

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

SAMPLE NOTICE TO MOVE A RESOLUTION FOR REMOVAL OF A DIRECTOR

To

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

To

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

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???

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.  

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.

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