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Removal of md/wtd?

Prashanth (Chartered Accountant) (2322 Points)

29 September 2011

Hi all,

1.Is Sec-284(Removal of director by the members) can be applied for removal of MD/WTD?if no through which sec can be applied by memebers to remove MD/WTD?

2.Suppose Sec-284 applies and a MD has been removed by the members,in such case can he retain ordinary director ship by such MD?

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2 Replies

Preet Kanwar Singh (Company Secretary) (161 Points)
Replied 29 September 2011

Where the articles empower the board to terminate the office of managing/ whole-time director, the board must observe the terms of the contract and the removal must be in accordance with the terms of the contract and the removal must be in accordance with the terms in that behalf as embodied in the contract, if any. For instance, if the contract provides for a notice of certain duration to be served by one party intending to terminate the contract on the other party to the contract, the board must, in case it intends to remove the MD, serve a notice of the stipulated period. If the board fails, it will tantamount to a breach of contract and the MD, serve a notice of the stipulated period. aggrieved by it would be entitled to claim damages for such a breach. A MD can be removed as a director by the company in general meeting under section 284 of the CA, which would result in the termination of office of the MD.....he may continue as a director in the company... experts views plz....!!!

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PRINCE KAUSHIK (CA finalist) (354 Points)
Replied 29 September 2011

1 -The right u/s 284 is statutory right given to mem. To remove by ordi. Reso.,any dir. In any manner or on whatsoever terms appointed. 2-mem. Will decide to wat extent be removed.