Some Important Judgment come under Section- 284 of Companies

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January 4, 2015

KHETAN INDUSTRIES PRIVATE LIMITED VS. MANJU RAVINDRA PRASAD KHETAN.

In this case it was held by the court that the shareholders have a right to remove the directors under section 284 by passing ordinary resolution and section 284 provides an inbuilt mechanism for the enforcement of the right and civil court has no jurisdiction to entertain the suit for removal of director.

LIC of India v Escorts Ltd.

As per a milestone judgment given in LIC of India v Escorts Ltd. (1986) it was held that it is not necessary to give reasons in explanatory statement for removal of a director as desired by section 173(2) (corresponding Section-102) . Reason behind this judgment given by the court was that the company is acting on the basis of a special notice given by the shareholder u/s 284 and it is not a resolution proposed by the company.

Only shareholder/s holding not less than 1% of total voting power or holding shares on which an aggregate sum of not less than Rs. 5,00,000 has been paid up as on the date of notice, can send special notice to the Company for removal of director

PROCEDURE FOR REMOVAL OF DIRECTOR IN TABULAR FORM:

1. A (Special notice) of the intension to move a resolution for the removal of director be furnished by No. of members (according to requirement of Section- 115 of Companies Act, 2013) to the company at least 14 days before the meeting at which it is to be moved, exclusive of the day on which the notice is served and the day of the meeting. (Section 169)

2. The company shall, immediately after the notice of the intention to move any such resolution has been received by it, give its members notice of the resolution in the same manner as it gives notice of the meeting.

3. If is not possible for the company to give notice to all the members, publish by advertisement in the newspaper having an appropriate circulation not less than 7 days before the meeting.

4. The company must give intimation to the concerned director of the intended resolution by sending a copy of the special notice received by it, forthwith on receipt thereof. The director shall have the right to be heard on the resolution at the meeting.

5. The director, who is sought to be removed, can make a representation in writing against his removal and request the company to notify it to the company’s members [section 169]. If the director requests the company to notify the members of the company his representation against his removal and the representation is of reasonable length and it has been received not too late, the company must

(a)Mention in the notice of the resolution to be moved at the annual general meeting, the fact of the representation having been received; and

(b)Send a copy of the representation to every member along with the notice of the meeting if the representation has been received before sending the notice of the meeting or separately if the representation has been received after sending the notice of the meeting.

If the representation could not be sent to the members because it was received too late or because the company made a default in sending it, the company must read out the representation at the annual general meeting, if the director requires it to do so. In addition, director can make oral representation at the annual general meeting.

6. Hold and convene a General meeting to discuss besides others the following matters: To pass a [Ordinary resolution] for the removal of director.

7. In case of listed companies, file a copy of the proceeding of the general meeting in the Stock exchange (s) where the securities of the company are listed.

8. File [e-form no. 12] with the Registrar of Companies within 30 days of passing the resolution.

9. Pay the requisite fees, as prescribed by the Companies (Registration Offices and Fees) Rules, 2014.

10. Fees can be paid through Credit Card / by cash / by cheque in favour of “MCA Collection Account ICICI Bank” at the prescribed rates. http://www.mca.gov.in/Ministry/pdf/tableoffee_01042014.pdfTable of Fees given on this Link.

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