MCA UPDATE

Ministry of Corporate Affairs (MCA) has issued Companies (Removal of Difficulties) Order, 2018 dated 21^st February, 2018 amending the provision for removal of Re- appointed Independent Director.  

As per Section 169(1) of the Companies Act, 2013, Company may remove a director before the expiry of his term by way of an ordinary resolution after giving him an opportunity of being heard.

As per Section 149(10) of Companies Act, 2013, an independent director can be re-appointed for second term only by way of special resolution

Consequently, an independent director can be re-appointed by way of special resolution but can be removed by way of an ordinary resolution.

To ensure better corporate governance in companies and balancing of powers of the board of the company, MCA has amended the provisions for removal of Independent Director. 

With this amendment, an independent director re-appointed for second term can be removed before the expiry of his term only by passing a special resolution after giving him an opportunity of being heard.