Resignation by Director

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According to the provisions of the Company Act, 2013 it is mandatory for every company to have a minimum number of directors as specified. But if there is removal of any director or resignation given by any director, the company needs to notify and file it with the Ministry of Corporate Affairs.

There can be three situations where a company needs to file the removal of director with MCA

Resignation given by Director

When resignation is given by the director, in such case the Board of Directors decides whether to accept or decline the resignation. If resignation is accepted then Board passes resolution and files the removal of director with the MCA.

Director removed by the Company

In this case a meeting is organised with the purpose of passing ordinary resolution in favour of removing director. Also the concerned director is given opportunity to be heard before passing the resolution.

Director doesn’t attend Board meetings

When the director of the company abstain himself from attending three consecutive board meetings which mean director is absent for 12 months even after receiving the notice. In such cases, the company files the removal of the director with MCA.

Process of Removal of Director

It is necessary to be compliant with the MCA guidelines for the removal of a director.

Right to be Heard

The first step is giving an opportunity to directors of being heard. The process of removal cannot be initiated without giving the proper opportunity to a director who is to be removed.

To Issue notice

The second step is to issue notice. This notice is processed by shareholders holding a minimum voting power of 1% or who hold shares on which an aggregate sum of not more than Rs 5,00,000 has been paid upon the date of the notice. This type of notice is called a special notice that must be signed by all the members. This notice must be delivered at least 14 days prior to the date of the meeting to the company, at which the resolution will be passed.

Notice to members

A copy of the notice must be sent to the director concerned before 7 days of the meeting. And notice must be mandatorily published on the company’s website.

Representation in writing

The complete description in writing can be made by the concerned director to the company against the notice of removal. Here the director has a right to make a plea to the company to send the written representation to all the members.

Appeal to the Tribunal

After completing the above steps, the organization or any aggrieved person after sending out representation can make an application to the Tribunal, requesting for nullification of the process.

Required Documents

Acceptable DocumentDocument TypeAdditional Details

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Removal of director is simple procedure and takes one day for the complete process.
The status will be updated on the same day on the portal of MCA.
After receiving the resignation letter the chairman of the Board must send letter to the resigning director that his/her resignation letter has been received. After that the letter is placed before the Board and the fact would be recorded in the minutes of the meeting.
After the resignation of director, he cannot be held liable for the losses incurred by the company after the date f acceptance of resignation.

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