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Removal of Director -News letter


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Minority Protection Helpline

Published in: Economy & Finance
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Removal of Director -News letter

  1. 1. REMOVAL OF DIRECTOR _____________________________________________________________________________________  Removal of a director is an extremely important and significant step which must be undertaken only after careful thought and deliberation.  Removal of a director means changing the core or the heart of the company viz. the Board of Directors. Such a change may affect the fortunes of the company or even change the destiny of the company forever. Thus Removal of Directors is an extremely important part of corporate law which cannot be overlooked.  Section 169 of the Companies Act, 2013 gives shareholders of a Company right to remove a director from his office, by ordinary resolution.  It is legally possible for a shareholder with 51% voting power to remove a director through the mechanism of section 169 by flawlessly complying with the procedural requirements stipulated in the section.  So majority who wants to remove director & a director representing minority who is getting removed should remember that there is recourse available to minority to object removal of director with CLB.  However, if such removal is oppressive to minority, it can be challenged u/s 397-398 of the Companies Act,1956 with the Company Law Board. Table of Cases Alok Prakash Jain v. Union of India, (1973)43 Com Cas 68 (Cal). Bhankerpur Simbhaoli Beverages Private Limited v. P.R Pandya, (1996)86 Com Cas 842 (P&H). Bushell v. Faith, [1970]1 All ER 53. Dabur India Limited v. Anil Kumar Poddar, (2001)4 Comp LJ 351.
  2. 2. REMOVAL OF DIRECTOR Escorts Ltd. v. Union of India, (1984) Comp LJ 387. Life Insurance Corporation of India v. Escorts Limited, (1986)1 SCC 264. Major General Shanta Shamsher v. Kamani Brothers, AIR 1959 Bom 201. Re El Sombrero Ltd., [1958]3 All ER 1. S.P Jain v. Union of India, (1966)1 Comp LJ 42 Bom. S.Varadrajan v. V. Venkateswara Solvent Extraction Private Limited, (1994)80 Com Cas 693 (Mad). Tarlok Chand Khanna v. Raj Kumar Kapoor, (1983)45 Com Cas 12 (Del). Union of India v. R.C Bhargava, (1998)4 Comp LJ 374.