In this blog, we have discussed the relevant provisions and procedures for the resignation of a director.
A director of a company may resign from his position by giving written notice. There may be several reasons for his or her resignation. In this regard, company law has specified an appropriate procedure that must be followed to give effect to such resignation.
The provisions relating to the resignation of directors are contained in Section 168 of the Companies Act 2013 read with Rule 15 & 16 of the Companies (Appointment and Qualification of Directors) Rules, 2014.
Intimation by BOD to ROC
When a director conveys his/her resignation from the office of director by way of a written notice, the Board of directors of the company needs to make a note of it and intimate ROC as well.
On receipt of such notice, the Board of Directors of the company must, within 30 days, inform the Registrar of Companies in Form DIR-12. The fact of such resignation is also to be placed on the company’s website within 30 days of the receipt of notice and it is further required to be disclosed in the Directors’ Report of the subsequent general meeting of the company.
Intimation by the concerned director
The concerned director is also obligated to inform the Registrar of Companies in Form DIR-11 within 30 days from the date of resignation. A copy of the resignation is to be filed along with detailed reasons thereof. Here, it should be noted that intimation by the director is recommended but not mandatory.
Date of resignation
The resignation will become effective from the date when the notice is received by the company or the date as may be specified by the director in the notice, whichever is later.
Liable for offenses
The law states that even after resignation, the director will be liable for any offenses that occurred during his tenure.
Resignation of Foreign Director
If a foreign director has resigned from his office, he can authorize in writing a PCA or PCS or PCMA or any other resident director to sign Form DIR-11 and file the same with the Registrar on his behalf intimating the reasons for the resignation.
Appointment by CG in certain cases
In a case where all the directors of a company resign from their offices under section 168 or vacate their offices under section 167, the required number of directors will have to be appointed by the promoter of the company or in his absence, by the Central Government. And those directors will hold office until the time directors are appointed by the company in its general meeting.
Procedure for Resignation of Director
When a director resigns from his office, the following procedure is adopted to give effect to the same:
1. The concerned director is required to give his resignation letter to the company. Both an email and a letter of resignation are valid modes of communication. As soon as the resignation letter is received from the director, the company should check whether it conforms to the requirements of Section 168 of the Act.
2. The company and its Board members should take note of it, convene a board meeting after the receipt of the resignation letter and include an item (detailing the fact of resignation) in the said meeting. Necessary approval by the BOD should be obtained for the same and authority should be fixed for filing the e-forms in this regard.
A specimen format of the Board resolution for accepting the resignation of a director can be checked here.
3. The company should within 30 days from the date of receipt of notice of resignation from the director, intimate the Registrar in Form DIR-12 and post the information on its website.
4. The concerned director may within 30 days from his resignation, forward to the Registrar a copy of his resignation in Form DIR-11 along with the reasons provided therein. The form should be accompanied by the prescribed fee. Though the filing of form DIR-11 is not mandatory, the director should be advised to file the same.
5. In case of resignation by a foreign director, he may authorize in writing a PCA or PCS or PCMA or any other resident director to sign Form DIR-11 and file the same with the ROC on his behalf. The form should indicate the reasons for resignation.
6. In the case of listed companies, the company should inform the fact of resignation to the stock exchange/s where the securities of the company are listed.
7. The company should make a note to mention the fact of resignation in the directors’ report concerning the immediately following general meeting of the company.
Forms for Resignation of Director
The relevant forms for resignation are as follows:
|DIR-12 to be filed by the company||To intimate the particulars of resignation to the ROC||Within 30 days of the date of receipt of notice of the resignation|
|DIR-11 to be filed by the director||To intimate the ROC of resignation along with reasons thereof||Within a period of 30 days from the date of resignation|
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