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Will the managing director cease to hold office under section 260?

Does Section 260 of the Indian Companies Act 1956 override the provisions of Article 36 in the private limited company's Articles of Association, which stipulate that a director shall not be subject to retirement unless they do so voluntarily?

During a takeover the Managing Director was appointed under Article 36 of AOA in 1996, through a board resolution. However, in the Form 32 filed with the ROC, he was listed as a 'Managing Director' in the "Names" section but defined as an 'Additional Director' under the "Brief particulars of changes" section.

So does he cease to hold office under section 260 if no AGM was held between 1997 to 2006 as the company had ceased operations?

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T. Kalaiselvan, Advocate (Advocate) 04 March 2024

The ability to remove a director rests on the company's articles of association and the prevailing laws in the jurisdiction. This consequential decision can be triggered by various factors such as misconduct, breach of duty, poor performance, conflict of interest, bankruptcy, or disqualification.

The ramifications of removing a director are significant and should not be underestimated. Careful consideration is paramount, as the decision can impact the company’s stability, reputation, and overall functioning. It is imperative to adhere to the company’s articles of association and applicable laws during the removal process to mitigate the risk of legal challenges or disputes.

Removing a director often involves documents requiring their signature, like resignation letters or resolutions passed at general meetings. However, exceptions might exist based on the specific circumstances and grounds for removal. Consult a lawyer for specific guidanace.