The Indian corporate governance structure is fundamentally anchored in the principle of shareholder democracy, where the power to appoint and remove directors serves as the primary mechanism for management accountability. Under Section 169 of the Companies Act, 2013, shareholders possess an inherent legal right to remove a director before the expiration of their term by passing an ordinary resolution. This provision ensures that directors, who act as agents and fiduciaries of the company, remain subject to the collective will of the owners.
The law establishes that this right is virtually absolute, provided that the company is not one that has adopted the principle of proportional representation under Section 163 for the appointment of two-thirds of its board. Furthermore, the statute protects directors appointed by the National Company Law Tribunal under Section 242 from being ousted through this standard shareholder-led process. This distinction is vital for maintaining the effectiveness of judicial interventions aimed at remedying mismanagement where a simple majority might otherwise immediately undo corrective appointments.
The Procedural Sine Qua None of Special Notice and Thresholds
The exercise of removal power is strictly regulated by the requirement of a special notice under Section 115 of the Act. This notice is a mandatory prerequisite that must be initiated by shareholders holding at least one percent of the total voting power or holding shares with an aggregate paid-up value of not less than five lakh rupees as of the date of the notice. According to Rule 23 of the Companies (Management and Administration) Rules, 2014, this notice must be delivered to the company at least fourteen clear days before the meeting at which the resolution is to be proposed, but not earlier than three months prior.
The requirement for “clear days” means the period must exclude both the date of service and the date of the meeting itself. Upon receipt, the board must act as a mandatory conduit, immediately forwarding the notice to the concerned director. This process serves as a critical check against arbitrary executive actions and ensures that the director is afforded sufficient time to prepare a defense against the proposed ouster.
Judicial Restraint and the Zee Entertainment Precedent
The limits of judicial interference in the removal process were decisively tested in the significant matter of Invesco Developing Markets Fund v. Zee Entertainment Enterprises Ltd. (2022). In this case, the Bombay High Court Division Bench set aside an earlier single-judge order that had granted an injunction against a shareholder-requisitioned meeting. The court reaffirmed that the power of shareholders to remove a director under Section 169 is an unfettered statutory right.
It held that the board of directors cannot refuse to convene a general meeting on the grounds that the proposed resolution might be legally infirm or that the reasons provided are unsatisfactory. This ruling underscores that the internal management of a company belongs to the shareholders and that courts must remain slow to obstruct the exercise of corporate democracy unless there is a clear violation of mandatory statutory provisions.
The Tata-Mistry Doctrine and the Limits of Section 242
The relationship between directorial removal and The National Company Law Tribunal’s (NCLT) powers was further refined by the Supreme Court in Tata Consultancy Services Limited v. Cyrus Investments Private Limited, Civil Appeal Nos. 440441 of 2020 commonly known as the Tata-Mistry case. The court examined whether the removal of a director could, by itself, constitute an act of oppression or mismanagement under Section 242.
The Supreme Court clarified that the Tribunal’s jurisdiction does not extend to second-guessing the business judgment of shareholders or interfering with a company’s decision to remove a director, provided the removal is not demonstrably oppressive or prejudicial to the interests of the company as a whole. The judgment established that the mere removal of an individual from a directorial position, even if handled abruptly, does not automatically trigger restorative reliefs under Sections 241 and 242 unless a wider pattern of probity-lacking conduct is proven.
Natural Justice and the Safeguard of Representation Rights
A cornerstone of the removal framework is the director’s right to be heard, a principle of natural justice codified in Section 169(4). A director facing removal has the statutory right to make a written representation to the company and request its circulation to all members entitled to attend the general meeting. The company is legally bound to state the fact of the representation in the meeting notice and send a copy to every member, provided time permits.
If circulation is not possible, the director can demand that the representation be read out at the meeting. This right is absolute and cannot be waived by the articles of association or any other corporate document. In the matter of Ratan Tata v. State of Maharashtra, Writ Petition No.1238 of 2019 the Bombay High Court noted that the communication of reasons for removal in such representations is part of a shareholder’s statutory duty and does not constitute defamation if the action is taken in the bona fide interest of the company.
Fraud and Jurisdictional Expansion in the Shailja Krishna Ruling
The year 2025 marked a watershed moment with the Supreme Court judgment in Shailja Krishna v. Satori Global Limited, 2025 INSC 1065. This ruling addressed the recurring debate over whether the NCLT, as a summary tribunal, could adjudicate complex claims of fraud and coercion incidental to removal. The Supreme Court held that the NCLT possesses wide original jurisdiction to decide all matters that are integral to a complaint of oppression and mismanagement.
In this case, where a director was ousted through a series of fraudulent share transfers and board meetings held without notice, the court ruled that the NCLT was fully empowered to investigate these manipulations and restore the director to her position. This precedent ensures that procedural manipulation cannot be used as a shield to execute a fraudulent removal, reinforcing the NCLT as a holistic forum for corporate grievance redressal.
Higher Thresholds for the Removal of Independent Directors
The legal framework provides enhanced protection for independent directors, particularly during their second tenure. While an independent director in their first term can be removed by an ordinary resolution, Section 149(10) stipulates that an independent director who has been re-appointed for a second term can only be removed by passing a special resolution, requiring a seventy-five percent majority.
For listed entities, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, have further strengthened this through Regulation 25(2A). Effective since 2022, SEBI introduced a “Majority of Minority” check, where if a special resolution fails, the removal is only valid if the votes cast by public shareholders in favor exceed the votes cast by them against. This prevents a promoter group from unilaterally removing an independent director who maintains the confidence of the public shareholders.
Modern Regulatory Compliance and the MCA-21 V3 Infrastructure
As of January 2026, the logistics of corporate filings have been modernized through the full operationalization of the MCA-21 V3 platform. Following the successful passage of a removal resolution, a company must file Form DIR-12 with the Registrar of Companies within thirty days. This filing must include the certified resolution, the special notice, and evidence of compliance with the director’s right to be heard.
Furthermore, the Ministry of Corporate Affairs has introduced a new KYC regime effective March 2026, where directors are required to file their KYC intimation only once every three years, provided there are no changes to their details. To improve oversight, three new Regional Directorates and six new Registrar of Companies offices have been established in major hubs like Navi Mumbai and Bengaluru, ensuring that the regulatory reach keeps pace with corporate growth.
Conclusion
The removal of a director under the Indian corporate legal framework represents a sophisticated equilibrium between the sovereign rights of shareholders and the procedural protections afforded to individuals in fiduciary roles. While Section 169 provides a clear pathway for ousting a director through an ordinary resolution, the rigorous requirements for special notice and the mandatory right of representation serve as essential barriers against arbitrary dismissal.
The judicial precedents of 2025-2026, particularly the Shailja Krishna Supreme Court ruling, have further strengthened this framework by affirming the NCLT’s role in scrutinizing fraudulent conduct and ensuring that corporate democracy is not used as a facade for illegality. For companies, meticulous compliance with both the letter and spirit of the Companies Act, 2013, is non-negotiable, as any procedural lapse can lead to the invalidation of the removal and prolonged litigation that destabilizes corporate governance.
Corporate control mechanisms under Indian company law extend beyond board accountability, as seen in the Process of Allotment of Shares Under Company Law in India, which also directly influences shareholder power and governance outcomes.