Disqualification and Removal of Directors

4. Disqualification and Removal of Directors

Disqualifications for appointment as director [Section 164]: a person cannot be appointed, or

cannot continue, as a director of any company if they fall into any of the following (main grounds):

• they are of unsound mind and so declared by a competent court;
• they are an undischarged insolvent;
• they have applied to be adjudicated as insolvent and the application is pending;
• they have been convicted by a court of any offence involving moral turpitude and sentenced to imprisonment for not less than six months, and five years have not elapsed since the sentence ended;
• they have been convicted of an offence dealing with related-party transactions under Section 188 at any time in the preceding five years;
• an order disqualifying them from being a director has been passed by a court or Tribunal and is still in force;
• they have not paid calls on shares held by them and six months have elapsed from the last day fixed for payment;
• they have not obtained a DIN;
• the company they were a director of has failed to file financial statements or annual returns for three continuous financial years — such a person is disqualified from re-appointment as a director in that company, or appointment in any other company, for five years from the date of default.

These grounds exist to keep persons of demonstrably poor financial or legal standing out of positions

of trust over shareholders' money.

Vacation of office [Section 167]: a director's office automatically falls vacant (without any

further action needed) if, among other grounds, they incur any disqualification under Section 164; if

they are absent from all Board meetings held during a period of twelve months, with or without

leave of absence; if they are convicted by a court of any offence and sentenced to imprisonment for

not less than six months; or if they act in contravention of the Section 184 provisions on disclosure

of interest.

Removal of directors [Section 169]: apart from vacation of office by operation of law, the members

of a company may actively remove a director before the expiry of their term by passing an

ordinary resolution in general meeting — but only after following a specific procedure: a

special notice of the intention to move the resolution must be given to the company well in

advance, the company must send a copy of the notice to the director concerned, and the director being

removed has a statutory right to make a written representation and to be heard at the meeting before

the resolution is voted on. This procedural safeguard exists precisely because removal is a serious …