Section 167 — Vacation of office of director

(1) The office of a director shall become vacant in case—
(a) he incurs any of the disqualifications specified in section 164:
1[Provided that where he incurs disqualification under sub-section (2) of section 164, the office of
the director shall become vacant in all the companies, other than the company which is in default under
that sub-section];
(b) he absents himself from all the meetings of the Board of Directors held during a period of twelve
months with or without seeking leave of absence of the Board;
(c) he acts in contravention of the provisions of section 184 relating to entering into contrac ts or
arrangements in which he is directly or indirectly interested;
(d) he fails to disclose his interest in any contract or arrangement in which he is directly or indirectly
interested, in contravention of the provisions of section 184;
(e) he becomes disqualified by an order of a court or the Tribunal;
(f) he is convicted by a court of any offence, whether involving moral turpitude or otherwise and
sentenced in respect thereof to imprisonment for not less than six months:
2[Provided that the office shall not be vacated by the director in case of orders referred to in clauses
(e) and (f)—
(i) for thirty days from the date of conviction or order of disqualification;
(ii) where an appeal or petition is preferred within thirty days as aforesaid against the conviction
resulting in sentence or order, until expiry of seven days from the date on which such appeal or
petition is disposed of; or
(iii) where any further appeal or petition is preferred against order or sentence within seven days,
until such further appeal or petition is disposed of.]
(g) he is removed in pursuance of the provisions of this Act;
(h) he, having been appointed a director by virtue of his holding any office or other employment in
the holding, subsidiary or associate company, ceases to hold such office or other employment in that
company.

1. The proviso ins. by Act 1 of 2018, s. 54 (w.e.f. 7-5-2018).
2. The proviso subs. by Act 1 of 2018, s. 54 (w.e.f. 7-5-2018).

(2) If a person, functions as a director even when he knows that the office of director held by him has
become vacant on account of any of the disqualifications specified in sub-section (1), he shall be punishable
1*** with fine which shall not be less than one lakh rupees but which may extend to 2[five lakh rupees].
(3) Where all the directors of a company vacate their offices under any of the disqualifications specified
in sub -section ( 1), the promo ter or, in his absence, the Central Government shall appoint the required
number of directors who shall hold office till the directors are appointed by the company in the general
meeting.
(4) A private company may, by its articles, provide any other ground for the vacation of the office of a