Company Law and Practice · Directors

Retirement, Resignation and Removal of Directors Explained

Updated 11 October 2026 · Fact-checked

A director's office ends in four main ways: retirement by rotation, resignation by written notice (Section 168), vacation of office on the grounds in Section 167, or removal by ordinary resolution on special notice (Section 169). To solve a question, identify the mode, apply its conditions, and conclude.

Understand Retirement, Resignation and Removal of Directors

A director does not hold office forever. The office ends when the term expires, when the director leaves, when the law says the seat is empty, or when the members remove the director. Exam questions test whether you can tell these modes apart.

Retirement by rotation is the routine exit. In a public company, a fixed share of the non-independent directors retire each year, and they can offer themselves for re-appointment. The rule comes from Section 152, which this page does not quote. Your study material gives the detail: broadly, two-thirds of the directors of a public company must be rotational, and one-third of those retire at each AGM. Check the exact figures in your ICSI study material.

Resignation is the director's own choice. Under Section 168, the director gives written notice to the company. The Board takes note of it, and the company informs the Registrar. The resignation takes effect on the date the company receives the notice or on the date stated in the notice, whichever is later. The director may also send a copy with detailed reasons to the Registrar within thirty days.

Vacation of office happens by operation of law. Section 167(1) lists the grounds. They include disqualification under Section 164, absence from all Board meetings held in twelve months, breach of Section 184 on interested contracts, a court or Tribunal disqualification order, conviction with imprisonment of six months or more, removal under the Act, and ceasing to hold the office through which the person became a director. No one has to pass a resolution. The seat falls vacant on the event.

Removal is the members' power. Under Section 169, the company can remove a director by ordinary resolution before the term ends. This needs special notice and a reasonable opportunity for the director to be heard. The director appointed by the Tribunal under Section 242 cannot be removed this way.

Key rules to remember

Removal of a director (Section 169(1)): Removal = ordinary resolution + special notice + reasonable opportunity of being heard; Applies before the term expires. Not available for a director appointed by the Tribunal under Section 242.
Independent director on second term: Removal of independent director re-appointed under Section 149(10) = special resolution + hearing; This is the first proviso to Section 169(1). A first-term independent director is removed by ordinary resolution.
Special notice (Section 169(2)): Special notice needed for: (a) the removal resolution; (b) the resolution to appoint a replacement at the same meeting; Both resolutions need special notice.
Rights of the director on removal notice (Section 169(3) and (4)): Copy of notice sent forthwith + right to be heard (member or not) + written representation circulated if time permits; If circulation fails, the director can require the representation to be read out at the meeting. The Tribunal can stop this if the right is abused for needless publicity of defamatory matter.
Filling the vacancy (Section 169(5) to (7)): Replacement at the same meeting (with special notice) holds office only for the predecessor's remaining term. Otherwise a casual vacancy.; The removed director cannot be re-appointed by the Board.
Resignation effective date (Section 168(2)): Effective date = later of (date notice is received) and (date specified in notice); The director stays liable for offences that occurred during the tenure.
Absence ground (Section 167(1)(b)): Absent from all Board meetings held in 12 months (with or without leave) = office vacant; It is all the meetings in the period, not just some.
Conviction ground (Section 167(1)(f)): Convicted of any offence + sentenced to imprisonment of at least 6 months = office vacant; The office is not vacated for 30 days from conviction or order, and during appeal as per the provisos.
Penalty for acting after vacancy (Section 167(2)): Fine of ₹1,00,000 to ₹5,00,000; Applies to a person who functions as director knowing the office is vacant.
Compensation (Section 169(8)): Removal does not take away compensation or damages due under the contract or terms of appointment; Removal under this section also does not limit other powers to remove a director under the Act.

How to solve Retirement, Resignation and Removal of Directors questions

Use this method for any fact-based question on how a director's office ended or can be ended.

1Identify the mode. Ask who acted: the director (resignation), the members (removal), the law (vacation), or the calendar (retirement by rotation).
2Write the provision first. Name the section, such as Section 168 for resignation, Section 167 for vacation or Section 169 for removal.
3Check the preconditions. For removal, check the type of director (Tribunal-appointed, independent on second term), special notice, and the hearing. For vacation, match the facts to a clause of Section 167(1).
4Apply the facts. Count the meetings missed, the months, the sentence length or the dates, and state the result.
5Check the timing rules. Look at the 30-day and appeal provisos for conviction, and the later-of-two-dates rule for resignation.
6Deal with the vacancy. Say who may fill the seat and for how long, and that the Board cannot re-appoint a removed director.
7Close with a clear conclusion in one line, such as 'Hence the office stands vacant' or 'Hence the removal is valid/invalid'.

Quickest way: Four-way sort: who ended the office?

When to use it: Use it for short-answer and case questions where you have a few minutes.

Director wrote a letter: Section 168. Effective on the later of receipt date and date in notice.
Members passed a resolution: Section 169. Check special notice, hearing, and the type of resolution.
An event occurred (disqualification, absence, conviction, Section 184 breach): Section 167. No resolution needed.
Term of rotation ended at the AGM: retirement by rotation, with re-appointment possible.
Write one line of law, one line of facts, one line of conclusion.

Common mistakes in Retirement, Resignation and Removal of Directors

Saying removal always needs a special resolution.
Students remember the special resolution for independent directors and apply it to everyone.
Fix: Removal is by ordinary resolution. A special resolution is needed only for an independent director re-appointed for a second term.
Forgetting special notice for the replacement appointment.
Students focus on the removal resolution only.
Fix: Section 169(2) requires special notice for both the removal and the appointment of someone in place of the removed director at that meeting.
Treating resignation as effective only after the Board accepts it.
Students confuse it with employment resignation practice.
Fix: Section 168 says the Board takes note. The resignation takes effect on the later of the date of receipt and the date specified in the notice.
Saying a director who absents from a few meetings loses office.
Students misread Section 167(1)(b).
Fix: The office falls vacant only if the director is absent from all Board meetings held during twelve months, with or without leave.
Applying Section 169 to a Tribunal-appointed director.
Students overlook the exclusion in the opening words.
Fix: A director appointed by the Tribunal under Section 242 cannot be removed under Section 169(1).
Thinking a resigned director is free of all liability.
Students think resignation wipes the slate clean.
Fix: The proviso to Section 168(2) keeps the director liable for offences that occurred during the tenure.

Worked examples

Example 1

Shreeji Textiles Ltd., a public company, wants to remove Mr. Arvind Kulkarni, a director appointed by the general meeting, before his term ends. Advise the company on the procedure and on whether he can claim compensation.

Show the solution

Provision: Section 169(1) lets a company remove a director by ordinary resolution before the term expires, after giving a reasonable opportunity of being heard. He was appointed by the general meeting, not by the Tribunal under Section 242, so the section applies.
Notice: Section 169(2) requires special notice of the resolution. Under Section 169(3), the company must forthwith send him a copy of the notice. He may be heard at the meeting, whether or not he is a member.
Representation: If he makes a written representation and asks for it to be notified to members, the company must, if time permits, state this in the notice and send a copy to every member who receives the notice. If it cannot do so, he can require it to be read out at the meeting.
Vacancy: The company may fill the seat at the same meeting if special notice of the intended appointment was given. The new director holds office only for the remaining term of Mr. Kulkarni. Otherwise it is a casual vacancy, and the Board cannot re-appoint him.
Compensation: Under Section 169(8)(a), removal does not deprive him of compensation or damages due under the terms of his contract or appointment.

Answer: The company can remove him by ordinary resolution on special notice after giving him a hearing. The vacancy may be filled at the same meeting if special notice was given. He keeps any contractual right to compensation or damages.

Example 2

Ms. Neha Iyer is a director of Kaveri Foods Ltd. The Board held five meetings in the twelve months from 1 April to 31 March, and she did not attend any of them, though she had taken leave for two. Is her office vacant? What if she attended one meeting?

Show the solution

Provision: Section 167(1)(b) says the office becomes vacant if a director absents himself from all the meetings of the Board held during twelve months, with or without leave of absence.
Apply: She missed all five meetings. Leave for two of them is irrelevant because the clause applies with or without leave.
Result: Her office is vacant. No resolution is needed. The vacancy arises by operation of law.
Variation: If she attended even one meeting in the period, she was not absent from all meetings. Section 167(1)(b) would not apply.
Consequence: If she kept acting as director knowing the office was vacant, Section 167(2) provides a fine of not less than ₹1,00,000 which may extend to ₹5,00,000.

Answer: Yes, her office is vacant under Section 167(1)(b), because she missed all Board meetings in the twelve months. If she had attended one meeting, the office would not be vacant on this ground.

Exam tips

Start every answer with the section number and the rule in plain words. ICSI-style answers reward provision, facts, then conclusion.
Write the comparison between resignation and removal as two or three short points: who initiates, what process is needed, and whether the director loses office without consent.
In a vacation question, quote the clause of Section 167(1) you are using, and check the provisos for conviction and appeal timing.
For retirement by rotation, use the figures in your ICSI study material and Section 152, as this page does not quote them.
Mention special notice and the director's right to be heard in every removal answer. Missing these loses marks quickly.

Practice questions from Directors

Retirement, Resignation and Removal 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.

Retirement, Resignation and Removal of Directors: frequently asked questions

What is the difference between resignation and removal of a director?

Resignation is the director's own act. It is made by written notice under Section 168. Removal is the members' act under Section 169. It is done by resolution on special notice after giving the director a hearing.

What majority is needed to remove a director under Section 169?

An ordinary resolution is enough in general. An independent director re-appointed for a second term under Section 149(10) can be removed only by a special resolution after a hearing.

From when does a director's resignation take effect?

Under Section 168(2), it takes effect from the later of the date the company receives the notice and the date specified in the notice. The director remains liable for offences during the tenure.

Does the company have to file anything with the Registrar when a director resigns?

Yes. Section 168(1) requires the company to intimate the Registrar in the prescribed manner, time and form. The director may also send a copy of the resignation with reasons to the Registrar within thirty days. Check the current form number in your study material.

Who fills the vacancy when a director is removed?

The vacancy may be filled at the same meeting if special notice of the appointment was given. Otherwise it is filled as a casual vacancy. The removed director cannot be re-appointed by the Board.