Mar 01, 2018

Removal of independent directors re-appointed for a second term only by way of a special resolution

Section 149(10) of the Companies Act, 2013 (‘Companies Act’) provides that an independent director of a company is eligible for re-appointment for a second term on passing of a special resolution by the company. However, under Section 169(1) of the Companies Act, a company is permitted to remove any director before the expiry of his term, by passing an ordinary resolution. Based on a joint reading of the aforementioned sections, it appeared that an independent director could be re-appointed for second term only by way of a special resolution, but may be removed thereafter by way of an ordinary resolution. The Central Government has, by way of the Companies (Removal of Difficulties) Order, 2018, amended Section 169(1) to provide that an independent director, who is re-appointed for a second term, can be removed only by passing a special resolution after giving him a reasonable opportunity of being heard.




These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.