28 September 2011
Dear Sir, We have family owned business, registered as a Pvt. ltd. Company. My father is the Chairman cum Managing director. His 3 children including myself are the directors in the company. Amongst the 3 directors two are NRI directors (including myself) Recently on the hospitalisation of the M.D, one of the director has forcefully taken position of the business and managing the company without the approval of either the M.D nor the the other directors. He has also taken away all the documents and records concerning the Company and refuses to hand over the same to the M.D. We have lodged a police complaint but no action was taken. Please advice what steps I can take to protect my company as a NRI director.
Please take note that there is a remedy available as per the provisions of section 397-398 of the Companies Act i.e.Prevention of Oppression and Mismanagement...We can file the case against that director in the Honable company Law Board having jurisdiction over your registered office.
for any assistance you may contact me at cssurajarora@gmail.com
04 October 2011
Sir, I understand that sec 397-398 are for minority shareholders. In our case the M.D and two directors are holding majority shares. Can we pass a resolution for removal of this one director who is behaving very high handedly. He is retaining the daily earnings of the Company and has failed to deposit the said amounts in the bank account which were to be deposited daily. He is surpassing the powers of the managing director in all respects. Pls. advice.
Look as far as removal of that Direcot is concerned ,We can Remove him under Section 283(1) (g) of the companies Act1956 but the court oftenly reject it and even in that case ,our We become liable as he will take plea against us that the other Directors are forcefully had removed him...the case will become against us..
now if you read section 398 it is mismanagement of the company....We will file petition under this section along with we file prey under section 543 of schedule XI of the companies act 1956....]
even send some email to the erring directors to not to indulge in malafide practices in regard to companies funds and please deposit that funds in companies accounts and then see....
Also offer him some Arbitration and seek for his reply....
06 October 2011
Sir, On your suggestion I went thru sec 543, I felt it is for liquidation of the company. We have already served notice under sec 283 for removal of director to this erring Director. Pls. let me know what other steps we can take to protect our company.
Pls. advice if we can file a civil suit as he is not depositing the daily collections in the bank accounts.
CAclubindia
