Section 169: Removal of directors
This section is for the removal of directors from a company, outlining the procedures and requirements for doing so.
The section, clause by clause
What the section says
In plain terms
(1)A company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard:
A company can remove a director by ordinary resolution before their term ends, after giving them a chance to be heard, unless the director is appointed by the Tribunal or is an independent director re-appointed for a second term, in which case a special resolution is required.
proviso4[Provided that an independent director re-appointed for second term under sub-section (10) of section 149 shall be removed by the company only by passing a special resolution and after giving him a reasonable opportunity of being heard:]
proviso5[Provided further that] nothing contained in this sub-section shall apply where the company has availed itself of the option given to it under section 163 to appoint not less than two-thirds of the total number of directors according to the principle of proportional representation.
(2)A special notice shall be required of any resolution, to remove a director under this section, or to appoint somebody in place of a director so removed, at the meeting at which he is removed.
A special notice is needed for any resolution to remove a director or appoint a new one in their place.
(3)On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director concerned, and the director, whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting.
When a company receives notice of a resolution to remove a director, it must immediately send a copy to the director, who has the right to be heard on the resolution at the meeting.
(4)Where notice has been given of a resolution to remove a director under this section and the director concerned makes with respect thereto representation in writing to the company and requests its notification to members of the company, the company shall, if the time permits it to do so,—
If a director makes a written representation to the company regarding their removal, the company must notify members and send them a copy of the representation, unless the Tribunal decides the representation is being used to spread defamatory material.
(4)(a)in any notice of the resolution given to members of the company, state the fact of the representation having been made; and
(4)(b)send a copy of the representation to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representation by the company), and if a copy of the representation is not sent as aforesaid due to insufficient time or for the company’s default, the director may without prejudice to his right to be heard orally require that the representation shall be read out at the meeting:
provisoProvided that copy of the representation need not be sent out and the representation need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure needless publicity for defamatory matter; and the Tribunal may order the company’s costs on the application to be paid in whole or in part by the director notwithstanding that he is not a party to it.
(5)A vacancy created by the removal of a director under this section may, if he had been appointed by the company in general meeting or by the Board, be filled by the appointment of another director in his place at the meeting at which he is removed, provided special notice of the intended appointment has been given under sub-section (2).
A vacancy created by removing a director can be filled by appointing a new director at the same meeting, as long as special notice was given.
(6)A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not been removed.
The new director will hold office until the end of the term of the removed director.
(7)If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy in accordance with the provisions of this Act:
If the vacancy is not filled at the meeting, it can be filled later as a casual vacancy, but the removed director cannot be re-appointed by the Board.
provisoProvided that the director who was removed from office shall not be re-appointed as a director by the Board of Directors.
(8)Nothing in this section shall be taken—
Removing a director under this section does not affect their right to compensation or damages, and does not limit other ways a director can be removed under the Act.
(8)(a)as depriving a person removed under this section of any compensation or damages payable to him in respect of the termination of his appointment as director as per the terms of contract or terms of his appointment as director, or of any other appointment terminating with that as director; or (b) as derogating from any power to remove a director under other provisions of this Act.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. The words “with imprisonment for a term which may extend to one year or” omitted by Act 29 of 2020, s. 34 (w.e.f. 21-12- 2020).
- 2. Subs. by s. 34, ibid., for “five lakh rupees, or with both” (w.e.f. 21-12-2020).
- 3. Subs. by Act 1 of 2018, s. 55, for “director shall also forward” (w.e.f. 7-5-2018).
- 4. The proviso ins. by Notification No. S.O. 768(E), dated 21st February, 2018 (w.e.f. 21-2-2018).
- 5. Subs. by ibid., for “Provided that”(w.e.f. 21-2-2018).
- 1. Subs. by Act 29 of 2020, s. 35, for section 35 (w.e.f. 21-12-2020).
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.