Section 169 of CA 2013 : Section 169: Removal Of Directors

Explanation using Example

Imagine a scenario where the shareholders of XYZ Private Limited are dissatisfied with the performance of one of their directors, Mr. John Doe, who they believe is not acting in the best interests of the company. They decide to remove him from his position before the end of his term. The company follows Section 169 of the Companies Act, 2013, and issues an ordinary resolution to remove Mr. Doe. However, since Mr. Doe is an independent director who has been re-appointed for a second term, the resolution to remove him must be a special resolution.

The company gives Mr. Doe a reasonable opportunity to be heard, as required by law. They also issue a special notice to all shareholders informing them of the upcoming resolution to remove Mr. Doe and to appoint a new director in his place. The notice includes the time and place of the meeting where this resolution will be discussed and voted upon.

Mr. Doe receives a copy of the notice and prepares a written representation defending his position and actions as a director. He requests that his representation be sent to all members along with the notice of the meeting. The company complies with his request and includes his representation in the notice sent to the shareholders, as they have enough time before the meeting.

At the general meeting, Mr. Doe is given the opportunity to speak before the vote on the resolution. Despite his efforts, the shareholders vote in favor of the special resolution, and Mr. Doe is removed from his position. Immediately following the vote, the shareholders appoint Ms. Jane Smith as the new director to fill the vacancy, having given special notice of this intention as well.

Ms. Smith will hold the director position until the date Mr. Doe's term would have originally expired, ensuring continuity on the board. Mr. Doe is not eligible for reappointment to the board by the directors, but he may be entitled to compensation or damages as per his contract or the terms of his appointment, which are not affected by the removal process.