Section 257 of the Companies Act, 2013
Section 257 of the Companies Act, 2013 deals with the procedure for removal of a director before the expiry of his term by a company in a general meeting.
🔹 Section 257 – Removal of Director by Company
✅ Key Provisions:
Power to Remove Director:
A company may, by ordinary resolution passed at a general meeting, remove a director before the expiry of his period of office (i.e., before his term ends).
Special Notice Requirement:
A special notice of the intention to remove the director must be given to the company at least 14 days before the meeting.
The company must send a copy of the special notice to the director proposed to be removed.
Right of the Director:
The director proposed to be removed has the right to be heard at the meeting.
He can make representations in writing, which the company must circulate to shareholders or read out at the meeting.
Effect of Removal:
Once removed, the director ceases to be a director immediately on the passing of the resolution.
The company must file Form DIR-12 with the Registrar of Companies to notify the removal.
Exceptions:
This section does not apply to a director appointed by the Tribunal under the Act, whose removal can be ordered by the Tribunal itself.
🔸 Purpose:
To allow shareholders the power to remove directors if they are dissatisfied with their performance or conduct.
Ensures due process and fairness by requiring notice and opportunity to be heard.
📝 Additional Points:
The director being removed is still entitled to any remuneration or compensation under contract unless otherwise specified.
Removal does not affect any claim for damages for breach of contract.
RELATED Blog
0 comments