Company Directors oversees the management and operations of a business, while shareholders own the company. Situations may arise where shareholders opt to remove a director due to inadequate performance or other concerns, or a director may choose to resign. Removing a director is a significant corporate action that requires careful deliberation and strict compliance with the legal framework provided by the Companies Act 2013 or applicable local laws. Whether initiated by an ordinary resolution, board resolution, or judicial order, the process must be conducted fairly, transparently, and in the company’s best interest.
The Director of a company may resign from their position in writing at any time. The resignation must be addressed to the Board of Directors and must state the date on which the resignation is to take effect. Once the Board has received the resignation, they must record it in the minutes of their next meeting.
The Director may also resign by orally informing the Board of their intention to do so. However, this oral resignation can only be accepted if it is unanimously agreed upon by all members of the Board. If there is even one dissenting vote, then the Director must submit their resignation in writing.
Once a Director has resigned, they are no longer able to exercise any of their powers or perform any of their duties as Director. However, they remain liable for any wrongful acts that they have committed while in office.
The Companies Act 2013 does not prescribe any particular format for the notice of resignation. However, it is advisable to include the following information in the notice:
- The date on which the resignation will take effect;
- The director’s name and address;
- The reason for resignation (if any); and
- A declaration that the director has no claims against the company.
Resignation Under Section 168
There are a few key things to keep in mind when resigning as a director under section 168 of the Companies Act, 2013. Firstly, you must ensure that your resignation is in writing and submitted to the company’s registered office. Secondly, you must give at least one month’s notice of your resignation, unless the articles of association of the company stipulate a different notice period. Thirdly, you may be liable to pay damages to the company if you breach your contractual obligations by resigning without giving proper notice. Finally, it is important to check with your local state laws as they may have additional requirements for resignation.
Documents Required for Filling Form DIR11 With the ROC
- The original copy of Form DIR11 duly signed by the director.
- A duly attested copy of the director’s resignation letter addressed to the company.
- An affidavit from the director in the prescribed format, declaring that they are not holding any office or position in any other company.
- A board resolution approving the director’s resignation.
- Copy of PAN Card
- Copy of Address Proof
Procedure
- The managing director must give notice of resignation in writing to the company.
- The managing director must also submit a copy of resignation letter to the Registrar of Companies (ROC).
- After receiving the resignation letter, the board of directors must take necessary steps to appoint a new managing director within two months from the date of receipt of the resignation letter.
FAQs
What are the conditions for a valid resignation of a director?
A director may resign by giving notice in writing to the company of his intention to resign. The notice must be signed by the director removal and delivered to the registered office of the company.
How much notice must a director give to the company of his intention to resign?
A director must give at least 7 days’ notice to the company of his intention to resign.
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