Director Removal from Company 2026

Directors Removal

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Removal of Director from a Company in India

The removal of a director from a company in India is one of the most sensitive and legally complex corporate actions a company can undertake. Done incorrectly without following the procedure mandated by the Companies Act, 2013, a director’s removal can expose the company to legal challenges, reinstatement orders from the National Company Law Tribunal (NCLT), penalties from the Registrar of Companies (ROC), and serious damage to corporate governance.

Whether the removal is driven by a breakdown of trust between promoters, a director’s misconduct or negligence, a restructuring of the board, or action initiated by the Central Government, every removal must follow a specific statutory process. The director being removed has legal rights, including the right to be heard. These rights cannot be bypassed, even when the circumstances of removal are clear-cut.

At xLegal, our company law team has handled director removal cases across a wide range of situations, including shareholder-initiated removals, governance disputes, disqualification-linked removals, and government-initiated actions. We manage the complete process from board resolution drafting to ROC filing, so that your company’s compliance record remains clean throughout the transition

What is Removal of a Director?

A director of a company in India holds office under a contract of appointment and under the provisions of the Companies Act, 2013. The Act provides that a director can vacate office in several ways by resignation, by disqualification, by efflux of time, or by removal. Removal is the only mode in which a director is compulsorily separated from the board against their will.

Under Section 169 of the Companies Act, 2013, a company’s shareholders have the power to remove a director before the expiry of their term, subject to certain protections and procedural requirements. Separately, the Central Government and the NCLT have powers under other provisions of the Act to remove directors in cases involving fraud, misfeasance, mismanagement, or disqualification.

A director who has been removed retains the right to receive compensation for loss of office if their service contract provides for it, and importantly, retains the right to be heard at the general meeting before the resolution for removal is passed. These are not optional courtesies; they are statutory rights, and failure to provide them renders the removal procedurally defective.

Who cannot be removed under Section 169?

Section 169 of the Companies Act, 2013 does not apply to a director appointed by the Central Government under Section 408, or to a director appointed by the Tribunal under Section 242. These directors can only be removed by the authority that appointed them. Additionally, the articles of a company may give certain shareholders the right to nominate directors, such that nominee directors can generally only be removed with the consent of the nominating shareholder, depending on the terms of the shareholders’ agreement.

Modes of Director Removal in India

The Companies Act, 2013 provides for director removal through several distinct routes, depending on who initiates the removal and the reason for it:

1. Removal by Shareholders - Section 169

This is the most common mode of director removal. Shareholders holding not less than 1/10th of the total voting power, or at least 100 shareholders collectively holding not less than 1/10th of the total voting power (whichever is lower), can initiate the removal process by giving special notice to the company. The removal is then put to a vote at a general meeting of the company, where it is passed by an ordinary resolution, a simple majority of votes cast.

A critical point: the director proposed to be removed must be given a copy of the special notice as soon as it is received by the company. The director has the right to make written representations, which must be circulated to all members, and the right to be heard at the general meeting before the vote is taken.

2. Removal by the Central Government - Section 388B to 388E (read with Section 241)

The Central Government, acting through an application to the NCLT under Section 241, can seek the removal of a director in cases of oppression of minority shareholders, mismanagement of the company, or conduct that is prejudicial to the public interest. The NCLT has broad powers in such cases, including the power to remove directors, alter the articles of association, and regulate the conduct of the company’s affairs for a specified period.

3. Removal on Grounds of Disqualification - Section 164

A director who becomes disqualified und,er Section 164 of the Companies Act, 2013 is deemed to vacate office in all companies in which they are a director. Grounds for disqualification include conviction for an offence involving moral turpitude, failure to file financial statements or annual returns for three consecutive years, non-payment of calls on shares, and being an undischarged insolvent. Once disqualified, the director’s removal from the register is a consequential compliance step, not a discretionary action.

4. Removal by the Tribunal - Section 242

If the NCLT passes an order under Section 242 in a case of oppression or mismanagement, it can include in that order the termination of the directorship of any person responsible for the conduct complained of. Such a removal is by judicial order and has immediate effect upon the passing of the order.

5. Vacation of Office Under Section 167

Section 167 of the Companies Act, 2013 provides for automatic vacation of office by a director in specific circumstances, including absence from all board meetings for 12 months (with or without leave), failure to disclose interest in a contract, acting as a director while disqualified, and failure to comply with Section 184 (disclosure of interest). While technically a vacation of office rather than a removal, the practical effect is the same; the director ceases to hold office by operation of law, and the company must update its records and file with the ROC.

Ordinary resolution vs special resolution: an important distinction

The removal of a director under Section 169 requires only an ordinary resolution, a simple majority of votes at a general meeting. This is significant because it means a majority shareholder can remove a director even if the articles require a special resolution for other matters. The Act specifically provides that no requirement of a higher majority in the articles can override the Section 169 ordinary resolution requirement for director removal.

Step-by-Step Procedure for Removal of Director Under Section 169

The removal of a director under Section 169 of the Companies Act, 2013 must follow a precise procedural sequence. Each step is mandatory; missing or misordering any step creates grounds for the director to legally challenge the removal.

Step 1 - Special Notice from Shareholders

The removal process begins with a special notice under Section 115 of the Companies Act, 2013, given by the qualifying shareholders (holding at least 1/10th of total voting power or a group of at least 100 qualifying shareholders) to the company. The special notice must be given not less than 14 days before the general meeting at which the resolution is to be moved, and must clearly state the intention to move a resolution for the removal of the named director.

Step 2 - Notice to the Director Being Removed

As soon as the company receives the special notice, it must immediately send a copy of the notice to the director concerned. This is a mandatory statutory requirement that the director must have sufficient time and information to prepare their response. Failure to send this notice to the director is a procedural defect that can invalidate the entire removal proceeding.

Step 3 - Director’s Right to Make Representations

The director being removed has the right to make written representations to the company in response to the special notice. If the director submits written representations within a reasonable time, the company is obligated to circulate those representations to all members of the company along with the notice of the general meeting. The director also has the right to be heard at the general meeting before the resolution is put to a vote. Neither of these rights can be denied.

Step 4 - Board Meeting to Approve the Notice of General Meeting

The board of directors convenes a board meeting to take note of the special notice received, to approve the calling of an Extraordinary General Meeting (EGM) or to include the resolution on the agenda of the next Annual General Meeting (AGM), and to approve the sending of notice to all members along with the director’s representations (if any). The board meeting must be convened with proper notice to all directors.

Step 5 - Notice of General Meeting to All Members

A formal notice of the general meeting – AGM or EGM is sent to all shareholders, directors, and auditors of the company, with a minimum of 21 clear days’ notice (or shorter with the consent of at least 95% of members entitled to vote). The notice must include the agenda item for director removal, the text of the ordinary resolution proposed, and the director’s written representations, if any.

Step 6 - Conduct the General Meeting

At the general meeting, the chairperson presents the special notice and the proposed resolution. The director being removed must be given an opportunity to be heard before the resolution is put to a vote. Members then vote on the ordinary resolution for removal. The resolution is passed if a simple majority of the votes cast are in favour.

Step 7 - File Form DIR-12 with the ROC

Within 30 days of the passing of the resolution for removal, the company must file Form DIR-12 with the Registrar of Companies (ROC) on the MCA21 portal. Form DIR-12 records the cessation of directorship and updates the Ministry of Corporate Affairs’ register of directors. The filing must be accompanied by a certified copy of the board resolution, the special notice, the ordinary resolution passed at the general meeting, and the minutes of the general meeting.

Step 8 - Update Internal Records and Third-Party Authorisations

After the ROC filing, the company must update all internal records to reflect the change in directorship. This includes updating the Register of Directors, cancelling or updating the removed director’s Digital Signature Certificate (DSC) authorisations, updating the company’s bank account signatories, removing the director’s access to company systems, and updating any contracts, licences, or authorisations that name the director.

Critical deadline: Form DIR-12 must be filed within 30 days.

Failure to file Form DIR-12 within 30 days of the director’s removal attracts a penalty on the company and its officers. The penalty is Rs. 50,000 for the company and Rs. 5,000 per day for continuing default, up to a maximum of Rs. 5,00,000 for the company and Rs. 50,000 for each officer in default. Filing on time is the simplest and cheapest compliance strategy.

Legal Compliance Requirements for Director Removal

Every director removal must satisfy the following compliance requirements under the Companies Act, 2013:

• Section 169 compliance – the removal must follow the exact procedural requirements of Section 169, including special notice, notice to the director, the director’s right to be heard, and the passing of an ordinary resolution at a properly convened general meeting.

• Section 115 compliance – the special notice must meet the timing and content requirements of Section 115, including the 14-day minimum notice period before the general meeting.

• Proper board and general meeting procedure – both the board meeting and the general meeting must be convened with proper notice, conducted with a quorum, and minuted correctly. Defective meetings give rise to procedural challenges.

• Form DIR-12 filed within 30 days – mandatory ROC filing to update the register of directors. Non-filing attracts daily penalties with no upper cap for the continuing default period.

• Maintenance of minutes and records – the company must maintain complete and accurate minutes of the board meeting, the general meeting, and all notices exchanged with the director. These records may be required in any subsequent dispute or tribunal proceeding.

• Compensation for loss of office – if the director has a service contract that provides for compensation upon early termination, the company must honour those contractual obligations. Failure to do so can result in a civil claim by the removed director.

• Update of all regulatory records – beyond the ROC filing, the company must update GST records, bank mandates, MCA portal access, DSC authorisations, and any other regulatory registrations that name the removed director.

Common Grounds for Removal of a Director

A director may be removed for a wide range of reasons. Here are the most common grounds that companies bring to xLegal:

• Breach of fiduciary duty – a director who acts in their personal interest rather than the company’s interest, who engages in self-dealing transactions without proper disclosure, or who diverts company opportunities to themselves or related parties.

• Fraud or financial misconduct – misappropriation of company funds, falsification of accounts, creation of fictitious invoices, or any other act of financial dishonesty.

• Persistent neglect of duties – a director who consistently fails to attend board meetings, fails to engage with company affairs, or fails to fulfil the obligations of their role over an extended period.

• Loss of shareholder confidence – in closely held companies, a breakdown of trust between promoter shareholders and a director (often a co-promoter) is the most common trigger for removal proceedings.

• Conflict of interest – a director who holds a position, investment, or relationship that creates a material conflict with the company’s business, and who refuses to address or disclose the conflict.

• Disqualification under Section 164 – a director who has become disqualified by operation of law due to conviction, non-filing defaults in other companies, insolvency, or other statutory grounds must be removed from the board.

• Operational disputes in multi-promoter companies – in companies with multiple founding promoters, disagreements over business direction, management decisions, or profit distribution sometimes result in a majority shareholder initiating the removal of a minority promoter-director.

Rights of the Director Being Removed

The Companies Act, 2013 provides a director being removed under Section 169 with important legal rights. These rights are designed to ensure that the removal process is fair and not arbitrary. Companies that ignore these rights risk having the removal set aside by the NCLT:

• Right to receive a copy of the special notice – the company must send the director a copy of the special notice immediately upon receiving it from the shareholders. This allows the director to understand the case against them and prepare a response.

• Right to make written representations – the director may submit written representations to the company, which the company must circulate to all members before the general meeting. If circulation is not possible due to time constraints, the director may require the representations to be read out at the meeting.

• Right to be heard at the general meeting – the director has the right to speak before the resolution is put to a vote. This is a personal right and cannot be denied, even if the director’s written representations have already been circulated.

• Right to compensation under the service contract – if the director’s appointment is governed by a service agreement that provides for compensation upon early termination or removal, the director is entitled to claim that compensation as a contractual right, regardless of the outcome of the removal proceedings.

• Right to approach the NCLT – if the director believes the removal is procedurally defective, oppressive, or motivated by reasons that constitute mismanagement or minority oppression, they can file a petition with the NCLT under Section 241 or Section 244 of the Companies Act, 2013.

What happens if the removal procedure is not followed correctly?

A director who has been removed in violation of the statutory procedure can petition the NCLT for reinstatement. The NCLT has the power to set aside the removal and restore the director to office if it finds the procedure was defective. The NCLT can also award compensation to the director and impose costs on the company. This is why procedural correctness is not optional; it is the single most important factor in a legally sound director removal.

Documents Required for Director Removal

For the Removal Process

• Director’s DIN (Director Identification Number) and PAN – required for Form DIR-12 filing on the MCA portal.

• Special notice from qualifying shareholders – the original notice signed by qualifying shareholders, clearly stating the intention to move the removal resolution.

• Copy of the board meeting notice and agenda – notice sent to all directors for the board meeting at which the EGM / AGM notice was approved.

• Board meeting resolution – certified copy of the board resolution approving the notice of general meeting and the calling of the general meeting.

• General meeting notice sent to all members – copy of the formal notice of the general meeting, including the text of the proposed ordinary resolution.

• Director’s written representations (if any) – copy of any written submissions made by the director being removed, if submitted.

• Minutes of the general meeting – certified copy of the minutes recording the proceedings, the vote, and the passing of the ordinary resolution.

• Ordinary resolution for director removal – the signed resolution was passed at the general meeting.

For the ROC Filing (Form DIR-12)

• Form DIR-12 – completed and signed by a director or company secretary of the company.

• Certificate of Incorporation and MOA / AOA – incorporation documents of the company, required for the filing.

• Updated list of directors – reflecting the current board composition after the removal.

• Proof of date of cessation – the date of passing of the ordinary resolution is the date of cessation of the removed director’s office.

• DSC of the authorised signatory – a remaining director or the company secretary must digitally sign the Form DIR-12.

Common Mistakes in Director Removal Proceedings

• Not sending the special notice to the director is the most frequent procedural error. Once a company receives the special notice from shareholders, it must immediately forward a copy to the director being removed. Failure to do this is an automatic ground for the director to challenge the removal.

• Not giving the director an opportunity to be heard – the director’s right to address the general meeting before the vote is a statutory right. Chairpersons who skip this step or rush past it expose the company to a procedural challenge.

• Passing a special resolution instead of an ordinary resolution – Section 169 requires only an ordinary resolution. Passing or purporting to require a special resolution for director removal under the articles does not override the Act. However, confusing the resolution type in the documentation can cause issues during ROC filing.

• Delaying the Form DIR-12 filing – filing beyond the 30-day window attracts significant per-day penalties. Many companies complete the internal procedure correctly but then delay the ROC filing, incurring avoidable costs.

• Not updating bank mandates and DSC authorisations – after removal, the director technically no longer has authority to act on behalf of the company. A removed director whose name remains on bank mandates or the MCA portal access creates a governance and fraud risk.

• Attempting to remove a nominee director without the nominator’s consent – if the director was appointed under a shareholders’ agreement as a nominee of a particular shareholder, attempting to remove them without the nominating shareholder’s consent can trigger a shareholders’ agreement dispute in addition to the director’s own challenge.

• Failing to maintain proper minutes – minutes of both the board meeting and the general meeting must be detailed, accurate, and signed within the prescribed time. Defective or incomplete minutes undermine the evidentiary record in any subsequent dispute.

• Not accounting for compensation liability – if the director has a written service agreement with a termination compensation clause, ignoring that liability before initiating removal can result in an unexpected and costly civil claim.

How xLegal Helps with Director Removal

Director removal is a legally sensitive process where procedural errors have serious consequences. At xLegal, our company law team manages every aspect of the process so that the removal is legally sound, fully documented, and filed correctly with the ROC:

• Initial assessment and strategy – we review the specific circumstances of the proposed removal, the director’s appointment terms and service contract, the company’s articles of association, and the shareholders’ agreement (if any) to identify the correct mode of removal and flag any risks before the process begins.

• Drafting of all required notices and resolutions – we prepare the special notice, the board meeting notice and agenda, the board resolution, the EGM / AGM notice, and the ordinary resolution all compliant with Section 169 and the Companies Act, 2013.

• Coordination of the board and general meeting – we advise on meeting procedure, quorum requirements, the chairperson’s obligations, and the director’s right to be heard – ensuring the meeting is conducted in a manner that withstands scrutiny.

• Filing Form DIR-12 with the ROC – we prepare and file Form DIR-12 on the MCA21 portal within the 30-day window, ensuring the cessation of directorship is correctly recorded in the Ministry’s database.

• Post-removal record updates – we assist with updating the Register of Directors, notifying relevant parties, updating bank mandates, and flagging any further regulatory updates required.

• Legal advice on directors’ rights and potential challenges – if the director raises objections, makes representations, or threatens to approach the NCLT, we advise the company on how to respond and how to protect the removal from a legal challenge.