Removal of a director: section 169 procedure

• A director appointed by the Tribunal under section 242 (oppression and mismanagement cases).
• A director elected by proportional representation under section 163, where the articles provide for it.
• An independent director re-appointed for a second term under section 149(10) can be removed, but only by a special resolution, not an ordinary one (Companies (Removal of Difficulties) Order, 21 February 2018).

What the law requires:

• Special notice signed by members holding at least 1% of the voting power, or shares with at least ₹5 lakh paid up, sent not earlier than 3 months and at least 14 days before the meeting (section 115, rule 23).
• A copy of the notice to the director at once (section 169(3)).
• Notice of the resolution to members at least 7 days before the meeting (rule 23).
• 21 clear days' notice of the general meeting, or shorter with the consent of at least 95% of the members entitled to vote (section 101).
• The director's right to send a written representation and to be heard (section 169(3) and (4)).
• An ordinary resolution: more votes for than against (section 114).
• DIR-12 within 30 days (section 170(2)).

• A copy of the special notice, sent at once (section 169(3)).
• The right to be heard at the meeting (section 169(1) and (3)).
• A written representation. If it reaches the company in time and the director asks, the company mentions it in the notice to members and sends a copy to each member. If it arrives too late, or the company does not send it, the director can have it read at the meeting. The Tribunal can stop this on an application if the right is being abused (section 169(4)).
• Compensation. Removal does not take away any compensation or damages due to the director under the terms of their contract or appointment (section 169(8)).

• The members can appoint another director in the removed director's place at the same meeting, if special notice of that appointment was also given (section 169(5)).
• The new director holds office only until the removed director's term would have ended (section 169(6)).
• If no one is appointed at that meeting, the vacancy can be filled as a casual vacancy, but the Board cannot re-appoint the removed director (section 169(7)).

When the office falls vacant by law (section 167(1)): the director is disqualified under section 164; misses all Board meetings in 12 months, with or without leave; breaks the section 184 rules on contracts in which they are interested, or fails to disclose that interest; is disqualified by a court or Tribunal order; is convicted and sentenced to 6 months or more in prison; is removed under the Act; or was appointed because of a post in a holding, subsidiary or associate company and leaves that post. For a court order or a conviction, the office is not vacated for 30 days, or longer while an appeal is pending.

See director resignation for the resignation steps.

The time limits are listed with the steps above: Steps and time limits.

• A Board resolution to remove a director: section 169 gives the power to the members, not the Board.
• Skipping the director's hearing or representation: the director has a right to both.
• Short notice periods: special notice at least 14 days before the meeting, and notice of the resolution to members at least 7 days before it.
• An independent director in a second term: needs a special resolution.
• Re-appointing the removed director: the Board cannot do it through the casual vacancy route.