Directors – Company Law – 3

Vacation of Office of Director (Sec 167)

This section provides the reason in when the office of the director shall become vacate. The following are the reasons:-

• He incurs any of the disqualifications specified in section 164; where he incurs disqualification under sub-section (2) of section 164, the office of the director shall become vacant in all the businesses , aside from the corporate which is in default thereunder sub-section.

• he absents himself from all the meetings of the Board of Directors held during a period of twelvemonths with or without seeking leave of absence of the Board;

• he acts in contravention of the provisions of section 184 relating to entering into contracts or arrangements in which he is directly or indirectly interested; he fails to disclose his interest in any contract or arrangement during which he’s directly or indirectly interested, in contravention of the provisions of section 184;

• he becomes disqualified by an order of a court or the Tribunal;

• he is convicted by a court of any offence, whether involving moral turpitude or otherwise and sentenced in respect thereof to imprisonment for not less than six months.

If the office held by any director has become vacant on the bottom of disqualification provided above and therefore the concerned director continues to function, he shall be punishable with imprisonment for a term which can reach one year or with fine which shall not be but one lakh rupees but which can reach five lakh rupees, or with both.

Resignation of a Director (Sec. 168)

• A director may resign from its office by giving a notice with the reasons of resignation in writing to the company. The Board shall on receipt of such a notice from a director shall note of an equivalent .

• Along with this the director should also forward the a copy of his resignation along with detailed reasons for the resignation to the Registrar within thirty days of resignation

• The resignation shall be effective from the date on which the notice is received by the company or the date specified by the Director in the notice whichever is later.

• When all the Directors resign at the same time under section 167, in such case the required number of directors are to be appointed by the promoter or, the Central Government. The Directors so appointed shall hold office till the administrators are appointed by the corporate generally meeting.

Removal of Director (Sec 169)

A company may, by ordinary resolution remove a director before the expiry of the amount of his office after giving him reasonable opportunity of being heard.

The following procedure is required to be adopted for removal of a director:

• A special notice from a member of the company proposing an ordinary resolution for removing the director is necessary.

• Send forthwith a copy of the special notice to the director proposed to be removed.

• Such director shall be entitled to be heard on the resolution of hearing.

• In the notice of the meeting, state the facts of the representation made by the director concerned and also send a copy of the representation to every member of the company to whom notice of the meeting is sent(whether before or after the receipt of the representations by the corporate ).

• If the representation is received too late and it could not be sent to the members, the director concerned may require that the representation shall be read out at the meeting. The director concerned has also the proper of being heard at the meeting.

• However, the National Company Law Tribunal on an application of the company or any other person who claims to be aggrieved, on having satisfied, may dispense with the procedure of sending a replica of representation and reading thereof at the meeting if it’s getting used to secure needless publicity for defamatory matter.

Punishment (Sec 172)

If a director of the corporate contravenes the provisions of this section such director shall be punishable with fine which shall not be but one lakh rupees but which may extend to five lakh rupees.

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