Last Updated on January 31, 2026
Directors are mandated to manage a company’s affairs and protect the interests of shareholders and other stakeholders. But there can be a scenario in which a director’s service can be detrimental to the company due to non-performance, misconduct, statutory disqualification, or a strategic reorganisation. The Companies Act, 2013, provides various legally recognised ways in which directors can be removed to maintain balance in corporate governance, protect shareholders’ interests, and uphold the principles of natural justice.
This blog discusses the various forms of directors’ removal in India, the legal provisions governing each form, and the compliance standards relating to directors’ removal.
Introduction
Managers and decision-making directors are the foundation of the management and decision-making structure of a firm. Their functions include laying strategic direction, statutory compliance and putting the best interests of the company and its stakeholders. Although directors are normally hired on a stable term, their extension does not hold absolute and unconditional terms.
The Company law in India is aware that there can be situations when the board of directors does not require the presence of a particular director. In an effort to deal with such a scenario, the Companies Act, 2013, puts down different modes of removal of directors. These clauses will serve to keep corporate discipline and, at the same time, promote procedural fairness and transparency.
Different Modes of Removal of Directors
1. Shareholder Removal of Director
The collective decision by shareholders is one of the most important ways of removal. Section 169 of the Companies Act, 2013, states that shareholders can remove a director before the expiry of his term by an ordinary resolution at a general meeting.
This starts by issuing a special notice by qualified members suggesting the removal. Once the notice is received, the company should notify the respective director and distribute the notice to all the shareholders. The director is entitled by the statute to make a written representation and may be heard during the general meeting.
The given mechanism also keeps the shareholders, who are the ultimate owners of the given company, in control of the board composition and protects the right of the director to defend his/her position.
2. Dismissal of the Director by the Board of Directors
The Board of Directors itself, in some cases, can remove a director without the shareholders’ approval. This usually extends to the directors who were not elected by the shareholders but by the board, i.e. further directors, alternate directors, and nominee directors.
The power of removal of such cases is bound to the provisions of the Articles of Association and the relevant statutory rules. Board-level removal can be frequently used in cases where the appointment of the director was conditional or temporary.
This mode enables companies to solve their operational issues or governance issues, and that is where urgent board restructuring is needed.
3. Statutory Disqualification through Automatic Removal
An automatic removal of a director may take place in the event that he or she incurs disqualification as per Section 164 of the Companies Act, 2013. These disqualifications cause vacation of office in statutory provisions, without a separate resolution.
The usual reasons behind the disqualification are the inability to submit financial statements or annual returns within a continuous period, conviction for known offences, committing fraud, or not fulfilling the statutory requirements. The disqualification brings about an operation of law termination to the office of the director.
4. Dismissal on the Ground of Retirement of a Director
Directors’ leave from the company is most often done through resignation, which is a voluntary way of termination. A company can have a director resign by handing in a written notice to the company.
The resignation is effective on the date of the notice or the date on which the company obtains the resignation, whichever is later. Upon the resignation, the company has to file the same with the board and submit the prescribed form with the Registrar of Companies within the required time.
Even though resignation is not a forced removal, it leads to the end of the director’s job, but it should be documented and reported appropriately to ensure that it is not outside the law.
5. Central Government or Tribunal Removal
Directors can be dismissed by the Central Government or the National Company Law Tribunal (NCLT) in extraordinary situations of severe misconduct, oppression, mismanagement or actions that are detrimental to the interest of the people.
The said removal is typically after an investigation or legal action under the Companies Act, 2013. This mode is aimed at safeguarding the interests of the shareholders, creditors and the people of the larger population, especially in cases where the corporate governance has been highly threatened.
6. Absence of Board Meetings Removal
An office of a director becomes vacant in the event that one is absent for a period of twelve months without leave of absence. The purpose of this provision is to make the directors interested in the management and decision-making processes of the company.
The persistent absence is a sign of inactivity and irresponsibility, which can have a negative influence on governance. Thus, the law considers long-term non-attendance as a reason to be removed.
7. Removal, according to the Articles of Association
Certain conditions or procedures may be stipulated in a company’s Articles of Association in some situations to remove directors. Such provisions can go together with the statutory processes as long as they do not conflict with the Companies Act.
It is the responsibility of the companies to scrutinise their Articles thoroughly prior to bringing removal proceedings to verify that internal governing documents have been adhered to.
8. Compliance and Filings after Removal
Regardless of the method of removal, some compliance requirements apply after a director has ceased to hold office. These involve updating the register of directors, any required board or shareholder resolutions, and submitting the relevant forms to the Registrar of Companies within the required timelines.
Conclusion
The Companies Act, 2013, offers several ways to remove directors, indicating the necessity of flexibility, accountability, and fairness in corporate governance. Regardless of the method used in the removal of the director, which may be through shareholder resolution, board action, statutory disqualification, resignation or regulatory intervention, due process should be followed.
Companies should ensure that removal procedures are conducted in a legal, transparent, and statutory and contractual manner. Proper documentation and timely filings not only help avoid legal disputes but also enforce corporate governance practices. Professional advice would also assist companies in navigating the challenges surrounding the removal of directors.
