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Removal Of a Director - Urgent

Rajeev (Accountant) (45 Points)

28 March 2011

One Pvt Ltd Company has 4 directors out of which 2 directors are trying to remove 1 director from the total four without consent of the 3rd director. If its coming for voting it will be 2:2.

1) whether they Can do this removal ?

2) If yes, howmany days before they have to give notice ?

3) During that notice period whether that person will be treated as director ?

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SANTOSH SHAH (Company Secretary) (754 Points)
Replied 29 March 2011

Originally posted by : Rajeev
	One Pvt Ltd Company has 4 directors out of which 2 directors are trying to remove 1 director from the total four without consent of the 3rd director. If its coming for voting it will be 2:2. 1) whether they Can do this removal ? 2) If yes, howmany days before they have to give notice ? 3) During that notice period whether that person will be treated as director ?

Hi Rajeev

In my opinion,

Removal of director requires special notice to be given as per Section 284.

The person who is going to be removed will be by passing resolution to that effect, but opportunity of being heard be given.

If there are 4 directors and one of the director is to be removed then voting can be 2:1 or 1:2 and not 2:2.

If a director is to be removed then there should be strong and valid reason of removal, like Not attending

continous 3 Board meetings, or all meetings in the last 3 months(without obtaining leave of absence),

or involved in fraud, etc.

Special Notice time period may be 7 days and above ( Experts please confirm Time period).

The person will be treated as director, until and unless resolution is passed at the board meeting for

removal and after hearing of the said director to be removed.

Experts your views solicted.

regards

Santosh Shah

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Shridhi Jain (Company Secretary) (1678 Points)
Replied 29 March 2011

You are four directors. The one whom you want to remove, cannot participate in voting for himself. Votes will be given by three directors, out of which one is disagreeing and two are agreeing. So you can remove that director.

Notice period will depend upon his term of employment. During notice period he will continoue as director but you can pass resolution restricting his powers...

That were my views. You should post you query on forum and get others' opinion too. Thanks.....

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