What is Director Removal/Resignation?
Director removal or resignation is the formal cessation of a director's position in a company. This can occur through voluntary resignation by the director, shareholder-initiated removal via Ordinary Resolution, or automatic vacation under Section 167 due to absence from board meetings for 12 months.
The process is governed by Sections 168 and 169 of the Companies Act, 2013. Form DIR-12 must be filed by the company within 30 days of resignation/removal, and Form DIR-11 may be filed by the resigned director.
Three Methods of Director Cessation
| Method | Initiated By | Legal Section | Key Form |
|---|
| Voluntary Resignation | Director submits written notice | Section 168 | DIR-11 (by director), DIR-12 (by company) |
| Shareholder Removal | Shareholders pass Ordinary Resolution at EGM | Section 169 | DIR-12 (by company) |
| Automatic Vacation | Absent from all board meetings for 12 months | Section 167 | DIR-12 (by company) |
Grounds for Removal Under Companies Act
- Disqualification under Section 164 of Companies Act
- Absence from board meetings for 12 consecutive months (Section 167)
- Prohibited transactions under Section 184
- Court or tribunal prohibition order
- Criminal conviction with sentence of 6+ months
- Non-compliance with regulatory requirements
- Voluntary resignation by the director
Penalty for Late DIR-12 Filing
| Delay | Penalty |
|---|
| 30–60 days | 2× standard government fee |
| 60–90 days | 4× standard government fee |
| Beyond 90 days | 10× standard government fee |
| Beyond 180 days | 12× standard government fee + potential prosecution |
