Resignation should be treated as a choice to be exercised by a director. In case of resignation, it should be sufficient for the director to establish proof of delivery of such information with the company to discharge him of any liability in this regard, or of events taking place subsequent to his having intimated his decision to resign. A copy of the resignation letter should also be forwarded to the Registrar of Companies within a prescribed period by the director along with proof of delivery to the company. This is necessary to avoid misuse of this choice through retroactive communications. There should not be any requirement on the part of the company to formally accept such resignation for it to be effective. It should become effective from the date of resignation, provided the filing with the Registrar of Companies (ROC) is within the prescribed period. There should be a specific duty on the part of the company to file information with the Registrar of Companies of a director’s resignation within a prescribed period of time of its being received.
Provisions for resignation of director
Section 168 of the Companies Act, 2013 (Act) relates to “resignation of director”. It states that a director may resign from his office by giving a notice in writing to the company. The Board of Directors shall on receipt of such notice take note of the same and the company shall intimate the Registrar of Companies in such manner, within such time and in such form as may be prescribed. The Board of Directors shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company.
Checklist for resignation of director
(i) Mode of resignation: A director may resign from his office by giving a notice in writing to the company i.e. the Board of Directors of the company. Therefore, resignation of a director cannot be oral. E-mail communication or letter addressed to the company is a valid mode of communication.
(ii) Whether approval of the Board of Directors is required: The Board of Directors shall take note of the receipt of the notice of resignation. The same can be considered in the meeting of the Board of Directors. In case of resignation, only “noting” is required and not “approval” of the Board of Directors. Accordingly, the resolution passed by the Board of Directors and the minutes of the meeting of the Board of Directors shall be drafted.
(iii) Intimation to the Registrar of Companies: The company (i.e. the Board of Directors) shall intimate the Registrar of Companies in such manner, within such time and in such form as may be prescribed. The company shall within 30 days from the date of receipt of notice of resignation from a director, intimate the Registrar in Form DIR-12 [Rule 15 of the Companies (Appointment and Qualification of Directors) Rules, 2014].
(iv) Uploading of information on website: The company shall post the information w.r.t. the resignation of director on its website, if any [Rule 15 of the Companies (Appointment and Qualification of Directors) Rules, 2014].
(v) Reporting in Board’s report: The Board of Directors shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company i.e. necessary disclosures in the Board’s Report.
(vi) Director may also forward a copy of his resignation to Registrar of Companies: Director may [prior to Companies (Amendment) Act, 2017, it was “shall” i.e. mandatory provision] also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar of Companies within thirty days of resignation. Where a director resigns from his office, he may forward to the Registrar of Companies (along with reasons for the resignation) in Form DIR-11 along with prescribed fees.
(vii) Resignation of foreign director: In case a company has already filed Form DIR-12 with the Registrar of Companies, a foreign director of such company resigning from his office may authorise in writing a practising professional (CA, CS, CWA) or any other resident director of the company to sign Form DIR-11. Such e-Form shall be filed on his behalf intimating the reasons for the resignation (however, as on date this provision is not mandatory).
(viii) Effective date of resignation: 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.
(ix) Entry in Register: The company officer or director shall make necessary entry in the Register of directors and key managerial personnel [maintained under Section 170 of the Companies Act, 2013 read with Rule 17 of the Companies (Appointment and Qualification of Directors) Rules, 2014].
(x) Liability of directors after resignation: The director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.
(xi) In case of resignation of all directors: Where all the directors of a company resign from their offices, or vacate their offices under Section 167 of the Act, 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.
|Gaurav N Pingle, Practising Company Secretary, Pune. He can be reached at email@example.com.|
 Relevant extract from JJ Irani Committee Report.