Remedy Against "Removal of Director"-Section 284

[Jitesh Varkal]

Dear Professionals,

Please enlighten me on the following issue:

1. There is a Limited Company in which there are 3 directors named A, B and C.
2. Director "B" is a father of DIrector "A"
3. Director "C" is a uncle of DIrector "A"
4. Now, "C-HUF"  has support of 12% shareholding, issued a letter as shareholder to the company for calling an EGM for the removal of Director "A" and appoint another Director "D" in place of Director "A".
5. Now, Director "A" got that letter and came to me and ask for remedy 'to not remove' him from company.

Question:

Is there any remedy available to Director "A" in this case? 

Director 'A' do not want to remove from company.

Please give your advise on the matter.

Thanks.

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WITH DUE REGARDS,

JITESH VARKAL

COMPANY SECRETARY

MO.9725832242

[Sapna gupta]

if u want to remove Mr A from the company dan u hve to follow
section-257 in this regard.In this section Mr. C give atleast 1 share
to Mr. D. thereafter Mr. D apply to the company to become a director
in place of Mr. A by depositing Rs 500 with the Notice as per
section-257.hope so ur query may be solve.correct me if m wrong.

Regards
Sapna Gupta

[Ramaswami Mohan]

Director"A" has to reply to the "C-HUF" shareholder letter defending that his removal is sought with ulterior bad motive which is against the interest of the company and would be detrimental to the interests of the company, the shareholders and BANKS / public financial institutions if they are having any stakes in the form of loans advanced to the company.

2. C-HUF is having only 12% shareholding control. what about the rest 88%. i presume and hope it is with A & B Directors. Removal of Director needs only an Ordinary Resolution of 51% voting. So you can defeat the motion seeking for removal of the Director.

regards,

Mohan

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[Deepak Arya]

Dear Sapna gupta 

there is no provision in the companies act that for becoming a director u should be a member of the company first.

[Sapna gupta]

i know the director should not to become a member fist..in this
situation i want to remove the director Mr A..if u read Section-257
the meaning make so clear.so that spl notice required as per section
190 to fulfil the condition.i think so u read section-257.in this
section even 1 person give notice to the company to become himself to
be director of the company.i knw the procedure is too long.

regards
Sapna

[Deepak Arya]

Dear mam

section 257 provides that   A person who is not a retiring director shall be eligible for appointment to the office of director at any general meeting, if he or some member intending to propose him has, not less than fourteen days before the meeting, left at the office of the company a notice in writing under his hand signifying his candidature for the office of director or the intention of such member to propose him as a candidate for that office, as the case may be 

 

so there is no need to transfer shares to Mr. D for applying for proposed appointment as director of the company.

 

hope u got it 

[Sapna gupta]

thanks 4 the clarification Mr Deepak Arya

Bt Section-257 may be helpful for Mr.jitesh in case if Mr. A is not a
ritiring Director.

Regards
Sapna

[Deepak Arya]

yes

my pleasure mam

[Jitesh Varkal]

dear professionals,

Please note that 

I required the remedy for director "A" 

who do not want to be removed from directorship.

as mention by  Mr.Ramaswami Mohan 

Director "A" has to reply to the "C-HUF" shareholder letter defending that his removal is sought with ulterior bad motive which is against the interest of the company 

Any format is there anybody for that Reply?

Please give me a format.

Thanks.

[ramela rangasamy]

 Dear Friend,


The Director, who wish that he should not be removed should submit suitable reply and justification to defeat his removal i.e reply to the special notice received from other member, who proposed for removal. His reply should be addressed to the Board of Directors, who will circulate to all or will read the same in the meeting. In case he neither wants to read nor to circulate the Board will consider his requisition.

if the Board or members not considered the justification and proceeded to go removal by convening of GM. Then the aggreived Director can move CLB for redressal by way of filing of petition under SEction 397 & 398, whereby you have to comply with Section 399 - applicability.

Hope I have explained.


So you check the following before proceeding further:

On what grounds, the Director wants his position to be retained in the company.
Whether he has invested?
If yes, how much is his shareholding and what is his role and contribution.
On what way the removal will prejudice him?
whether by monetary way or non-monetary way?

There is no prescribed format to submit the representation. Simply can reply addressed to the Board of Directors by mentioning the subject as "Reference to Special Notice dated ___ received on ____".
 

Yours truly,
R.Ramela
Company Secretary in Practice
A-6, Aaryaa Harmony Apartment, A.S.Colony,
Police Kandasamy Street, Olympus,
Ramanathapuram,
Coimbatore 641 045.
Cell No.9442617180
Phone No.0422 – 2317180
e-mail: ram...@rrcompanysecretaries.com

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From: Jitesh Varkal <jitesh...@gmail.com>
To: csmy...@googlegroups.com
Sent: Monday, 23 July 2012 4:28 PM
Subject: [CSMysore] Remedy Against "Removal of Director"-Section 284

[Jitesh Varkal]

Dear Sir/Madam,

Director"A" Received Following Notice from Shareholder "C-HUF"

From:

C -HUF

Address of C-HUF,

 

Date: 10.07.2012

To,

The Board Of Directors

_______________ LTD

Address of Company

 

Sub :-Notice Under Section 169 to call a meeting and intimation under section 284.

 

Sir,

I, C-Karta of C-HUF,as Shareholder of the Company, holding 11.90 % holding of the Company i.e. 20,S10 equity shares of Rs. 100/-each hereby gives Notice under Section 169 of the Companies Act, 19S6 and intimation under section 284 of the Companies Act, 19S6 that,

Mr. A is indulged in unlawful activity of selling of Company's assets viz Plant and Machinery against the interest and consent of the shareholders. I therefore submit this requisition to call an Extra Ordinay General Meeting at the earliest convenience to adopt following resolutions with or without modification.

"RESOLVED THAT pursuant section 284 of the Companies Act, 19S6 Mr.A, be and is hereby Removed as Director of the Company and in his place Mr. D be and is hereby appointed As Director in the vacancy"

Your kind attention is invited to provisions of section 169 and 284 of the Companies Act, 19S6 in this regard.

For C -HUF

Sd/-

C

KARTA.

[ramela rangasamy]

Dear Friend,

Please ask Mr.A to give his representation if he really wants to object the statement "Mr. A is indulged in unlawful activity of selling of Company's assets viz Plant and Machinery against the interest and consent of the shareholders".

In case of failure to give representation or failure to attend GM or failure to move to CLB presums that MR.A has committed mistake.

In fact the mistake is committed by Mr.A, he can accept it and no need to take any action as stated above, which may involve cost to him.


Mr.A can take action as stated above, only in case genuinely Mr.
A wants his position to continue in the company.
                                                                                                                                                                                                                                                                                                                                 & amp; zamp;                                                                                                               

Yours truly,
R.Ramela
Company Secretary in Practice

From: Jitesh Varkal <jitesh...@gmail.com>

[Jitesh Varkal]

Dear Sir/Madam,

the  "Sub :-Notice Under Section 169 to call a meeting and intimation under section 284 "

Can we Consider this notice as a "Special Notice".

[ramela rangasamy]

Dear Friend,

Yes. We have to consider this as "Special Notice". Because please refer to the following:

"Notice under Section 169 of the Companies Act, 19S6 and intimation under section 284 of the Companies Act, 19S6 that,

"Your kind attention is invited to provisions of section 169 and 284 of the Companies Act, 1956 in this regard."

Yours truly,
R.Ramela
Company Secretary in Practice

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From: Jitesh Varkal <jitesh...@gmail.com>
To: csmy...@googlegroups.com

Sent: Tuesday, 24 July 2012 12:02 PM

Subject: Re: [CSMysore] Remedy Against "Removal of Director"-Section 284

Dear Sir/Madam,

the  "Sub :-Notice Under Section 169 to call a meeting and intimation under section 284 "

Can we Consider this notice as a "Special Notice".

On Tue, Jul 24, 2012 at 11:55 AM, ramela rangasamy <rum...@yahoo.com> wrote:

Dear Friend,

Please ask Mr.A to give his representation if he really wants to object the statement "Mr. A is indulged in unlawful activity of selling of Company's assets viz Plant and Machinery against the interest and consent of the shareholders".

In case of failure to give representation or failure to attend GM or failure to move to CLB presums that MR.A has committed mistake.

In fact the mistake is committed by Mr.A, he can accept it and no need to take any action as stated above, which may involve cost to him.


Mr.A can take action as stated above, only in case genuinely Mr.
A wants his position to continue in the company.

                                                                                                                                                                                                                                                                                                                                 & amp; amp; zamp;                                                                                                               

[Jitesh Varkal]

Dear Sir/Madam,

Finally Company has to convene EGM.

Is there any other alternative.

Thanks.

[ramela rangasamy]

Dear Friend,

Yes. If the Board not proceed call for GM as per Section 169, the shareholders can convene it.

 

Yours truly,
R.Ramela
Company Secretary in Practice
A-6, Aaryaa Harmony Apartment, A.S.Colony,
Police Kandasamy Street, Olympus,
Ramanathapuram,
Coimbatore 641 045.
Cell No.9442617180
Phone No.0422 – 2317180
e-mail: ram...@rrcompanysecretaries.com

---

From: Jitesh Varkal <jitesh...@gmail.com>
To: csmy...@googlegroups.com

Sent: Tuesday, 24 July 2012 12:19 PM

                                                                                                                                                                                                                                                                                                                                  & amp; amp; amp; zamp;                                                                                                               

[Jitesh Varkal]

Dear Sir/Madam,

What should be Subject of Notice?

[Soumya s narayan]

The shareholder seeking requisition has only 12 % shareholding. Since the resolution needs to be passed as an Ordinary Resolution at the EGM, the requisite majority is required for removal. 12% is not enough.

So, unless majority shareholders vote in favor of removal, there is no concern in my opinion.

Correct me if I am wrong.

regards

soumya

[ramela rangasamy]

 Dear Friend,

Are you asking about subject for the representation by MR.R to the special notice or subject of GM notice?

Yours truly,
R.Ramela
Company Secretary in Practice

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From: Jitesh Varkal <jitesh...@gmail.com>
To: csmy...@googlegroups.com

Sent: Tuesday, 24 July 2012 12:33 PM

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[Jitesh Varkal]

Dear Madam/Sir,

I am asking about " subject of GM notice ".

Please do the needful.

Thanks for your response.........

[ramela rangasamy]

Dear Friend,

Matters is only proposed. It has to be passed in the GM as ordinary resolution (simple majority). Only on completion of the even of putting the resolution for vote by show of hands or by poll, we can conclude that the resolution is passed or not.

 

R.Ramela
Company Secretary in Practice

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From: Soumya s narayan <soumyas...@gmail.com>
To: csmy...@googlegroups.com
Sent: Tuesday, 24 July 2012 2:39 PM

soumya

                                                                                                                                                                                                                                                                                                                                   & amp; amp; amp; amp; zamp;                                                                                                               

[ramela rangasamy]

SPECIAL BUSINESS:

1.            To consider and if thought fit, to pass, with or without modifications, the following resolution as an ordinary resolution, in respect of which a special notice has been received by the company from a members pursuant to Section 284 read with Section 190 and other applicable provisions of the Companies Act, 1956.

 

“RESOLVED THAT Mr.________, Director of the Company be and is hereby removed from the office of director of the Company with effect from the conclusion of this meeting.”

 

Yours truly,
R.Ramela
Company Secretary in Practice
A-6, Aaryaa Harmony Apartment, A.S.Colony,
Police Kandasamy Street, Olympus,
Ramanathapuram,
Coimbatore 641 045.
Cell No.9442617180
Phone No.0422 – 2317180
e-mail: ram...@rrcompanysecretaries.com

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From: Jitesh Varkal <jitesh...@gmail.com>
To: csmy...@googlegroups.com

Sent: Tuesday, 24 July 2012 3:05 PM

Thanks for your response.........

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[Jitesh Varkal]

this EGM Resolution can be held by Postall Ballot?

[Jitesh Varkal]

under section 169 and Section 284, a resolution for removing the Director can be pass by Postall Ballott?

[ramela rangasamy]

 

If the Board decides, you can go. But it is length process and involves cost.

Instead, you can put the resolution for voting by poll instead of show of hands.

R.Ramela

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From: Jitesh Varkal <jitesh...@gmail.com>
To: csmy...@googlegroups.com

Sent: Wednesday, 25 July 2012 12:38 PM

Thanks for your response.........

                                                                                                                                                                                                                                                                                                                                     & amp; amp; amp; amp; amp; amp; zamp;                                                                                                               

[Jitesh Varkal]

Dear Friends,

What is the Main difference between Poll and Show of hands?

[ramela rangasamy]

Postal Ballot means you have to send the ballot by post by following the postal ballot rules.

For conducting vote by poll refer to provisions of Section 177 to 185 of the Companies Act, 1956.

Yours truly,
R.Ramela
Company Secretary in Practice

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From: Jitesh Varkal <jitesh...@gmail.com>
To: csmy...@googlegroups.com

Sent: Wednesday, 25 July 2012 1:35 PM

Dear Friends,

Thanks for your response.........

                                                                                                                                                                                                                                                                                                                                      & amp; amp; amp; amp; amp; amp; amp; zamp;                                                                                                               

[Jitesh Varkal]

Dear Friends,

What is the Main difference between Poll and Show of hands?

[ramela rangasamy]

Dear Friend,

Sorry.

I think you might have referred to the provisions of Section 177 to 185 and also 189  of the Companies Act, 1956.

Show of hands, simply when the resolution is put to vote, CM will ask to raise hands of the shareholders whoever favours the resolution. Then the hands raised will checked and names will be noted down. If the hands raised are more than than the objection, then the resolution will be considered as passed.

Poll means issuing ballot paper to all, who attended the meeting and complying with the procedures mentioned under SEction 177 to 185.


 

Yours truly,
R.Ramela
Company Secretary in Practice

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From: Jitesh Varkal <jitesh...@gmail.com>
To: csmy...@googlegroups.com

Sent: Wednesday, 25 July 2012 1:51 PM

Dear Friends,

Thanks for your response.........

                                                                                                                                                                                                                                                                                                                                       & amp; amp; amp; amp; amp; amp; amp; amp; zamp;                                                                                                               

[Indrani Sanka]

Hi,

Can i know who are the share holders of the Company is it the Director's themselves or outsiders. As if the members and the board specify that they had knowledge of the sale that had taken place the issue is solved. Just that majority of the members/ directors should have agreed at the respective meeting.

On proving the same mr. A can continue to be the director of the company.

Thanks,

Indrani

[Jitesh Varkal]

There are both directors' and outsiders' as a members.