Business Laws and Ethics · Directors - Role, Responsibilities, Qualification, Appointment, Removal, Remuneration and Powers

Removal and Resignation of Directors under Companies Act

Updated 10 October 2026 · Fact-checked

A company can remove a director before his term ends by an ordinary resolution under section 169, after special notice and a reasonable chance to be heard. A director resigns under section 168 by written notice to the company. Resignation takes effect on receipt or on the later date he specifies.

Understand Removal and Resignation of Directors

A director is appointed for a term, but that term is not a guarantee. Shareholders own the company, so the law lets them remove a director they no longer trust. Section 169 gives this power. It is balanced by protections for the director: he must get special notice, a copy of the resolution and a chance to be heard.

The usual route is an ordinary resolution passed in a general meeting. The director may be removed before the expiry of his period of office. The company must first give him a reasonable opportunity of being heard. This is the natural-justice requirement and examiners test it often.

There are exceptions and special cases. A director appointed by the Tribunal under section 242 cannot be removed under this section. An independent director re-appointed for a second term can be removed only by a special resolution, again after a hearing. The section also does not apply where a company has used section 163 to appoint at least two-thirds of its directors by proportional representation.

Resignation is the director's own exit. Under section 168 he gives written notice to the company. The Board takes note of it. The company intimates the Registrar and places the fact of resignation in the directors' report laid at the next general meeting. The director may also send a copy with detailed reasons to the Registrar within thirty days. Resignation does not wipe out liability: he stays liable for offences that occurred during his tenure.

Removal does not end every right. The removed director can still claim compensation or damages under his contract or terms of appointment. Other provisions of the Act that allow removal also remain available.

Key rules to remember

Removal of a director (section 169(1)): Ordinary resolution + reasonable opportunity of being heard, before expiry of term; Not available for a director appointed by the Tribunal under section 242.
Independent director on second term: Special resolution + reasonable opportunity of being heard; Applies to an independent director re-appointed for a second term under section 149(10).
Special notice (section 169(2)): Required for a resolution to remove a director, and for a resolution to appoint someone in his place at that meeting; The company must forthwith send a copy of the notice to the director, who may be heard at the meeting whether or not he is a member (section 169(3)).
Representation by the director (section 169(4)): Written representation, if time permits: state it in the notice and send a copy to members; otherwise it can be read out at the meeting; The Tribunal can stop this if the rights are being abused to secure needless publicity for defamatory matter.
Filling the vacancy (section 169(5)-(7)): Fill at the same meeting if special notice of the appointment was given; the new director serves the predecessor's remaining term; If not filled, it is a casual vacancy. The removed director cannot be re-appointed by the Board.
Resignation (section 168): Written notice to the company; effective on the date of receipt or the date specified, whichever is later; Company intimates the Registrar and reports it in the directors' report. Director may file reasons with the Registrar within 30 days. He remains liable for offences during his tenure.
All directors gone (section 168(3)): If all directors resign or vacate under section 167, the promoter, or in his absence the Central Government, appoints the required directors; They hold office until directors are appointed by the company in general meeting.

How to solve Removal and Resignation of Directors questions

Use this order for any question on removal or resignation of a director.

1Identify the exit route: removal by shareholders (section 169) or resignation by the director (section 168).
2For removal, check who the director is: Tribunal-appointed under section 242, independent director on a second term, or an ordinary director.
3Fix the resolution type: ordinary resolution for an ordinary director; special resolution for the second-term independent director.
4Check the procedure: special notice, copy sent to the director, reasonable opportunity of being heard, and his representation if made.
5Deal with the vacancy: can it be filled at the same meeting, and by whom if not?
6For resignation, state when it takes effect, who must be informed (Registrar, directors' report) and that liability for offences during tenure continues.
7Add the savings: compensation or damages under contract remain payable.
8Conclude with a clear answer: valid or invalid removal, and why.

Quickest way: Four-check test for a removal question

When to use it: Use it for MCQs and short case-based questions where you must decide quickly whether a removal is valid.

Check 1: Is the director Tribunal-appointed (section 242)? If yes, section 169 does not apply.
Check 2: Is he an independent director on a second term? If yes, you need a special resolution; otherwise an ordinary one.
Check 3: Was special notice given and was he heard? If not, the removal is flawed.
Check 4: Is there a vacancy to fill? Same meeting only if special notice of the appointment was given; the Board cannot re-appoint the removed director.

Common mistakes in Removal and Resignation of Directors

Saying every director needs a special resolution for removal.
Students mix up removal with the second-term independent director proviso.
Fix: Remember the default is an ordinary resolution. Special resolution is only for an independent director re-appointed for a second term.
Forgetting special notice.
Students remember the resolution type and the hearing but skip the notice.
Fix: Special notice is needed both for the removal resolution and for appointing someone in his place at that meeting.
Applying section 169 to a Tribunal-appointed director.
The exclusion sits in the opening words and is easy to miss.
Fix: Underline 'not being a director appointed by the Tribunal under section 242' and check it first.
Saying a resigned director is free of all liability.
Students assume resignation ends everything.
Fix: State that he remains liable for offences that occurred during his tenure.
Saying resignation takes effect only when the Board accepts it.
Confusion with older practice or with other bodies.
Fix: The Board only takes note. Effect is from receipt of notice or the date in the notice, whichever is later.
Saying a removed director loses all claims.
Students treat removal as a penalty.
Fix: Section 169(8) preserves compensation or damages under his contract or terms of appointment.

Worked examples

Example 1

The members of Kaveri Textiles Ltd. want to remove Mr. Rao, an ordinary director appointed by the company in general meeting, before his term ends. Advise on the procedure and what happens to the vacancy.

Show the solution

Mr. Rao was appointed by the company and is not a Tribunal-appointed director, so section 169 applies.
He is not an independent director on a second term, so an ordinary resolution is enough.
Special notice is required of the resolution. The company must forthwith send him a copy.
He has the right to be heard at the meeting, whether or not he is a member. If he makes a written representation and asks for it to be notified, the company must, if time permits, mention it in the notice and send a copy to members. Otherwise he can require it to be read out.
The vacancy may be filled at the same meeting if special notice of the intended appointment was given. The new director holds office for the rest of Mr. Rao's term.
If the vacancy is not filled then, it is a casual vacancy, but the Board cannot re-appoint Mr. Rao.

Answer: Remove him by ordinary resolution after special notice and a reasonable opportunity of being heard. Fill the vacancy at the same meeting only if special notice of the appointment was given; the replacement serves the balance of the term. Mr. Rao keeps any contractual compensation claim.

Example 2

Ms. Iyer, an independent director of Sagar Foods Ltd., is on her second term. The Board plans to remove her through an ordinary resolution. Is this valid? Also state when her resignation would take effect if she gave notice on 10 March specifying 1 April as the date.

Show the solution

Part 1: for an independent director re-appointed for a second term, the proviso to section 169(1) requires a special resolution.
She must also be given a reasonable opportunity of being heard. An ordinary resolution is therefore not enough.
Part 2: under section 168(2), resignation takes effect from the date the company receives the notice or the date specified, whichever is later.
Assuming the company received the notice on 10 March, the later date is 1 April.
The company must intimate the Registrar and report the resignation in the directors' report at the next general meeting. She may send reasons to the Registrar within thirty days.
She stays liable for offences that occurred during her tenure.

Answer: The removal by ordinary resolution is not valid; a special resolution and a hearing are needed. If she resigns, it takes effect on 1 April, and she remains liable for offences during her tenure.

Exam tips

In MCQs, the traps are resolution type, Tribunal-appointed directors and the effective date of resignation. Check these three first.
In written answers, use short headed points: who can be removed, resolution, special notice, hearing, vacancy, compensation. Each earns marks.
Quote section numbers only for the ones you are sure of: 169 for removal, 168 for resignation, 242 for Tribunal appointments.
In case studies, state the conclusion in the first line, then give reasons. Examiners look for the right outcome and the reason.
Do not confuse director removal (section 169) with auditor removal (section 140), which needs a special resolution and Central Government approval.

Practice questions from Directors - Role, Responsibilities, Qualification, Appointment, Removal, Remuneration and Powers

Removal and Resignation of Directors in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Removal and Resignation of Directors: frequently asked questions

Which section governs removal of a director under the Companies Act, 2013?

Section 169 governs removal. A company may remove a director by ordinary resolution before his term expires, after giving him a reasonable opportunity of being heard.

Can the Tribunal remove a director?

Section 169 itself deals with removal by the company. It also says the company cannot use it for a director appointed by the Tribunal under section 242. Section 169(8) also notes that other provisions of the Act may give power to remove a director.

When does a director's resignation take effect?

Under section 168(2), it takes effect from the date the company receives the notice or the date specified in the notice, whichever is later. The Board only takes note of it; acceptance is not required.

Does a director who resigns escape liability?

No. He remains liable for offences that occurred during his tenure. He may also send a copy of his resignation with detailed reasons to the Registrar within thirty days.

Can a removed director be re-appointed by the Board?

No. If the vacancy is not filled at the meeting and becomes a casual vacancy, the removed director cannot be re-appointed by the Board of Directors.