Resignation/Removal of Directors from Company
Section 168 of the Companies Act, 2013 (hereinafter referred to as CA, 2013) provides for resignation of director. A director may resign from his office by giving a notice in writing to the company and the board shall upon receipt of such notice take note of it and intimate the Registrar. Board shall also the fact of such resignation in the report of directors laid in the subsequent general meeting of the company. Section 168(2) required the resigning director to submit a copy of resignation along with detailed reasons to the Registrar within thirty days of resignation. The resignation shall take effect from the date on which the notice is received by the company, or the date as specified by the director in notice. Also, the proviso states that the resigning director shall be liable even after his resignation for the offences which occurred during his tenure. Section 168(3) considers a situation where all the directors of a company resign from their offices or vacate their offices under Section 167 then the promoter will take over or if they are not present then the Central Government shall appoint the required number of directors who will hold office till directors are appointed in the general meeting.
Filing of Forms with MCA for Resignation.
Depends upon case to case basis
- Filing of Forms with MCA for Resignation of Directorship.
- Individuals planning to resign from the post of directorship.
- Purchase of Plan
- Expert Assigned
- Share the details as requested
- Preparation of Form and Filing with MCA
- KYC of Director
- DSC & DIN of Director
What are the various types of Directors in a Company?
1. Executive Director:
Executive Director is in full-time employment of the Company. He looks after the day-to-day business affairs and administrative functions of the Company. Executive Directors can draw salary, attend board meetings and represent the Company in the World.
2. Non – Executive Director:
Non-Executive Director is not engaged in the day-to-day business affairs and administrative functions of the Company. He is entitled to attend Company Meetings and can provide professional services to the Company. Being a Non-Executive Director, he cannot draw salary firm the Company.
3. Managing Director:
Managing Director is a Director who is entrusted with substantial powers of management of the affairs of the company. The Roles and Responsibilities of the Managing Director are governed by the Articles of Association or the Agreement between the Company and such Director.
4. Additional Director:
Board of Directors of the Company can appoint a Director between two annual general meetings subject to the provisions of the Articles of Association of a company. Such Director is called Additional Director. He can hold office only upto the date of next Annual General Meeting of the Company.
5. Alternate Director:
In cases where Original Director is absent for a period of not less than three months, Alternate Director may be appointed by the Board of Directors to act for and on behalf of such absent Director.
In Case of Resignation By Director
(Without Company's Consent or Approval)
Resignation Letter by Director has to be filed along with DIR- 11 with the ROC.
Resignation Letter by Director has to be filed along with DIR- 11 with the ROC.
If the director of a company wishes to resign or the board decides to terminate a director for several reasons. The Director of a company can quit the board by documenting a resignation letter with the company and providing all the intimations to the Registrar of Companies (ROC).
A director may quit a company by providing notice in writing to the company and the board is expected to infer the ROC of such heed within 30 days in form DIR-12. In case the director selects, they may also deliver a document of the resignation letter to the ROC along with the explanations for resignation using form DIR-11.
Format of Resignation Letter by Director
Format of Resignation Letter by Director
Date: ————
To The Board of Directors
Name of the Company]
[Address———-]
Sub: Resignation Letter
Dear Sir/Madam, I, ———————- R/o —————————————————–,Unfortunately, I must step down from my corporate directing post due to confidential and unavoidable circumstances. Please accept this letter as my resignation and let go of my duties. Please confirm receipt of this letter and go through the necessary procedures at the Registrar of Companies’ office.
Yours Faithfully
Name of Director
DIN: ————-
Obligation on the Directors Part Who Is Resigning
Obligation on the Directors Part Who Is Resigning
- A director can resign from his post by providing notice in writing to the board of directors of the company. An email or a letter to the firm is also an acceptable mode of transmission
- A copy of the resignation can also be sent along with the features of justification for the resignation to the Registrar of Companies(ROC) in form DIR-11 with the prescribed payments in the Companies Rules,2014 within 30 days from the date of resignation
- The effective date of resignation: It shall be in impact from the date on which the corporation has obtained in the resignation letter or the date the director has mentioned it in the resignation letter. The significant date of resignation shall be the same as the date of extinction that is attained in the form DIR-12
- With DIR-11 the director is also instructed to attach the following documents:
- The heed of the resignation that is documented with the Company (resignation letter can also be attached)
- Evidence of Dispatch of the letter
- If any disclosure that is earned from the Company and is required the Director has appointed Yes in form DIR-11
- Other evidence can also be furnished as optional attachments.
Process in Case of Resignation By Director
Step-by-Step Procedure to follow
Step-by-Step Procedure to follow
- The date on which the Notice Is Received by the company or
- The Date, If Any, Specified by The Director in the notice, whichever is later.
- Enclose the copy of Notice sent to the Company.
- Enclose Proof Of Dispatch.
- File the said form within 30 days of resignation along with the prescribed filing fees
1. The Director intending to resign shall send notice in writing to the Company. The resignation of a director shall take effect from:
2. The director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.
3. The law has caste duty upon the Director Resigning, to File Form DIR-11 (Company shall file form DIR 12) and
Duty of Resigning Director in Case of Resignation:
A director shall also forward a Copy of His Resignation Along With Detailed Reasons for the resignation to the Registrar within 30 (Thirty) days of resignation through filing of Form DIR.11 under his Digital Signature. It means it will be mandatory for all directors to have Digital Signature under Companies Act-2013.
Effective Date of Resignation:
As per section 168 (2), the resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, Whichever Is Later.
SECRETARIAL PRACTICE:
As discussed above E-forms to be filed in case Resignation of Director are form DIR. 11 and DIR. 12.
• Filing of Form DIR.11 is the responsibility of resigning director under his/her digital signature and Whereas Filing of Form DIR. 12 is the responsibility of Company.
Where all the directors of a company resign from their offices, or vacate their offices under section 167, the promoter 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 general meeting.
DIR - 11:
- Enter the date of appointment of resigning director in the company.
- In case of an alternate director, enter the DIN of the director to whom the appointee is alternate and click Pre-fill button. System will automatically display the name of the director to whom the appointee is alternate.
- Enter the date of filing of resignation with the company and also effective date of resignation specified in the notice.
- The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later. And the same effective date is required to be
In Case of Removal of Director
(With Company's Consent & Approval)
Obligation on the Companies Front
Obligation on the Companies Front
- The board of directors shall accept and consider the heed of resignation that is obtained and accordingly the filing should be initiated by the board for resigning it is essential to enroll the minutes of the meeting of the meeting
- The registrar should be informed through form DIR-12 (according to rule 15 of the Companies Act,2014) that the board of directors should be informed within 30 days from the date the submission is collected
- The board of directors should illustrate the resignation in the director’s report of the annual board meeting and it should also be published on the website of the Company
- The company is expected to assemble these documents while filing DIR-12 along with the heed of resignation and removal of directors.
Liability of Director After the Resignation
Liability of Director After the Resignation
The stability, responsibilities, and liabilities of directors are generally governed by the Companies Act, 2013. However, the responsibilities and liabilities of directors for specific actions are given under different legislations as discussed below.
(i) Liability under the Companies Act, 2013
Liability for default by a company has been committed on an ‘officer who is in default’ who is liable to a punishment prescribed under the Act. An ‘officer who is in default includes:
- A full-time director
- key managerial staff, if there is no key managerial staff, a director who has assented in writing to such specification, or if no such director is prescribed, all the directors
- Every director, regarding contravention of any of the requirements of the Act, who is familiar with such contravention or where such contravention has taken a position with his approval or connivance.
The Act also designates penalty for fraud, where someone shall be punishable with custody for a term not less than 6 months but which may expand to 10 years and a penalty which shall not be less than the percentage implicated in the fraud but which may expand to three times the percentage implicated in the fraud.
The Act differentiates the penalties of an administrative director from that of a non-executive director. Although a non-executive director is a board member, they do not provide for the day-to-day management undertakings of a company.
A non-executive director shall be responsible only in appreciation of such ordinances or mistakes by a company which happened with his understanding, attributable through the board procedures, with his approval or connivance, or where he had not worked diligently.
(ii) Liability under other legislations
The directors of a private company shall be responsible for the payment of tax privileges from the company. However, a director will not be responsible if he confirms that the non-recovery cannot be associated with any gross pay, misfeasance, or violation of duty on his portion in association with the relationships of the company.
Steps To Follow For Filing
Step 1: Call a Board Meeting
As per Section 168(1) and 173 and Secretarial Standards-I, upon receipt of the resignation letter, the company shall hold a meeting of the board or pass board resolution by circulation. There it should take note of the resignation letter given by the director of the company. Further, authorize CS or CFO or any director of the company to file requisite form with ROC.
Step 2: Time Bound Disclosures
A listed company must submit disclosures of such resignation to stock exchange where the company shares are listed within 24 hours of the conclusion of the board meeting. Further, the same has to be updated on the website within 2 working days. This has to be in compliance with Regulation 30 and 46(3) of the SEBI, (LODR) Regulations, 2015.
Step 3: Form and Documents Filing
Section 168(1) read with rule 15 of the Companies (Appointment and Qualification of Directors) Rules, 2014, ROC has to be intimated in 30 days from the receipt of notice of resignation from a director in Form DIR-12 along with requisite documents and fees.
Further, director may also forward a copy of his resignation to ROC within 30 days of resignation in Form DIR-11 along with detailed reasons for resignation and fees.
In case where a company has already filed Form DIR-12 with ROC, a foreign director of such company resigning from his company can authorize in writing a practicing Chartered Accountant or a Company Secretary to sign Form DIR-11 on his behalf.
Step 4: Register of Directors and KMP (Key Managerial Personnel)
It is pertinent to make necessary entries in the register of directors and KMP about the date of cessation of office and reasons thereof.
Step 5: Post Compliances
As per Section 134(3)(q) read with Rule 8(5) of the Companies (Accounts) Rules, 2014 and Rule 15 of the Companies (Appointment of Directors) Rules, 2014, necessary to disclose the details of directors who have resigned during the year on website and in the Board’s report.
