Issue Regarding Removal of Directors by the Board

Pragya Lalwani

This write up attempts to clarify the issue relating to authority of the Board to remove a director from his office.

1. Background

Section 169 of the Companies Act, 2013 enshrines the provisions concerning the removal of directors. It provides for the procedure of removal of directors by the shareholders. Does that mean Board of Directors have no power to remove any of the directors? Going back to section 167 which provides for vacation of office of a director, sub-section (4) of it states that a private company may, by its articles, provide any other ground for the office of a director in addition to those specified in section 167(1). This means that every private company which is not a subsidiary of a public company may provide additional grounds in its articles for vacation of office of director.

Thus, articles of a private company may provide that the office of a director would become vacant if it is requested in writing by all the other directors to resign his office or any other ground empowering the Board to ask for vacation of office of any director. However, only a private company can do so as and not the public company.

Now, connecting it with section 169, a question arises that whether any company could include the same ground by its Articles of Association regarding removal of director by demanding resignation of a director. The same issue has been analysed in this article keeping in view provisions of section 169.

2. Analysis of provisions of section 169

Section 169 of the Companies Act, 2013 enshrines the provisions concerning the removal of directors by the shareholders.