REMOVAL OF AN INDEPENDENT DIRECTOR FOR NOT ATTENDING BOARD MEETING IN THE LAST 12 MONTHS BY A LISTED COMPANY NAMELY GTT DATA SOLUTIONS LIMITED UNDER SECTION 167(1)(B) OF THE COMPANIES ACT, 2013

 REMOVAL OF AN INDEPENDENT DIRECTOR FOR NOT ATTENDING BOARD MEETING IN THE LAST 12 MONTHS BY A LISTED COMPANY NAMELY GTT DATA SOLUTIONS LIMITED UNDER SECTION 167(1)(B) OF THE COMPANIES ACT, 2013

FACTS OF THE CASE

Mr. Samarjeetsinh Vikramsinh Ghatge (Independent Director) of GTT Data Solutions Limited was removed under Section 167(1)(b) of the Companies Act, 2013 because he failed to attend any board meetings for 12 consecutive months. His office was vacated automatically on 14 August 2025, and the company later disclosed this to the stock exchange in June 2026.

LEGAL BASIS FOR REMOVAL

SECTION 167(1)(B), COMPANIES ACT, 2013:

A director automatically vacates office if they are absent from all board meetings held during a continuous period of 12 months, regardless of whether leave of absence was sought.

This provision ensures that directors remain actively engaged in governance and prevents inactive directors from continuing in office.

DISCLOSURE DELAY:

 The company identified the lapse only after receiving its Annual Secretarial Compliance Report (ASCR) on 30 May 2026.

REGULATORY COMPLIANCE:

Disclosure was filed with BSE Limited on 2 June 2026 under Regulation 30 of SEBI (LODR) Regulations, 2015

KEY CONSIDERATIONS FOR LISTED COMPANIES

AUTOMATIC VACATION VS. REMOVAL:

Vacation under Section 167(1)(b) is automatic and does not require shareholder approval.

Removal under Section 169 requires a shareholder resolution.

COMPLIANCE OBLIGATIONS:

Listed companies must promptly disclose director cessations to stock exchanges under SEBI (LODR) Regulations.

RISK OF MISUSE:

 Courts have cautioned that improper notice of board meetings can make such vacation invalid. Companies must ensure proper documentation of meeting notices and attendance

BUT ROC MAY NOT APPROVE THE FORM DIR-12 AND ASK YOU TO RESUBMIT WITH THE FOLLOWING DOCUMENTS

·      Minutes of all Board Meetings during the relevant period

·      Board Meeting Attendance Register

     AFFIDAVIT CONFIRMING:

• The director had not attended meetings for 12 months

• Meeting notices were properly issued

• No litigation existed regarding the cessation

• The company was regular in MCA filings

COMPLIANCE WITH SECTIONS 167 AND 164

·      The ROC also gave the concerned director an opportunity to submit objections.

·      If no response was received, the DIR-12 was eventually approved.

CASE LAWS ON THE SUBJECT

Union of India v. R. Gandhi (Madras High Court, 2015)	The court emphasized that vacation of office under Section 167 is automatic and does not require a board resolution.
M.K. Srinivasan v. Registrar of Companies (NCLT, 2017)	The NCLT held that once a director fails to attend all meetings for 12 months, the company must file DIR‑12 with the ROC. •      The tribunal rejected arguments that leave of absence could protect the director, affirming that leave is irrelevant under Section 167(1)(b).

 

KEY LESSON LEARNED

Even though the law provides automatic vacation of office, the ROC may require strong documentary proof before approving DIR-12.

Proper corporate records are therefore critical.

RISKS & GOVERNANCE IMPLICATIONS

Delayed disclosure can attract regulatory scrutiny and penalties.

BOARD EFFECTIVENESS:

 Prolonged absence of directors undermines governance and decision-making.

INVESTOR CONFIDENCE:

 Transparency in reporting director cessations is critical for maintaining trust in listed companies.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,