Resignation of Director

1. How can the Director resign?

Reply – As per section 168 of companies act 2013

a) The Director shall give a resignation in writing to company.

b) Retiring director shall also send the reason of resignation and a copy to ROC by filing e-form -*DIR* 11 within 30 days of its resignation.

c) Company shall take note of the same by passing a board resolution to that effect and as per Rule 15 of Companies (Appointment and Qualification of Directors) Rules, 2014 the company shall intimate the registrar through filing of form DIR-12 within 30 days.

2. What happens if company does not accept his resignation? Is it necessary to accept his resignation by board, and after that he has to resign?

Reply-  Sec 168 of company’s act 2013 does not state any requirement of acceptance of resignation of a director by BOD rather they are required to take a note of its resignation at their BOD meeting and pass the board resolution to that effect.

Further, In Renuka Datla and Ors. Vs.  Biological E Limited, a question arose as to whether the director had ceased to be the director from a specified date?
According to the article 129 of AoA of the Company, the office of a director becomes vacant if a director sends his notice of resignation in writing to the company. The Court held that this clause doesn’t require the acceptance of the resignation by the board for resignation to take effect. Further, where a person had sent his notice of resignation to the company on a date, clearly expressing that he wants to relinquish his post, ceased to be the director of that company from a specified date. In the case where all the directors of a company resign, then the Central Government will appoint the required no. of directors until new directors are appointed by the company.

3. From which period the resignation will be valid?

Reply –As per section 168(2)

The resignation shall be effective from

         a. Date on which notice is received by company or

         b. Any other date specified by director 

4. What are Liabilities of resigning director?

Reply- As per section 168(2), the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.

5. What are the compliance if there is only 2 directors in the company?

Reply- In Scenario a. the Company can refer Section 174(2) of the Companies Act, 2013 and it’s Articles of Association for the remedy. Section 174(2) provides if the number of directors falls below the quorum then the continuing directors:

• may appoint a director in the meeting for increasing the number of directors to that fixed for the quorum or
• Summon a general meeting of the company to appoint a director and for no other purpose.

Clause 69 of Table F provides that if the number of directors falls below the quorum fixed by the Act, the remaining directors can, for increasing the number of directors to that fixed quorum, summon a General Meeting of the Company.

In Scenario b. the Company can refer section 168(3) of Companies Act, 2013. The section provides that when all the directors of a company resign from the Board, the promoter or the Central Government in promoter’s absence, shall appoint the required number of directors who shall hold office till the directors can be appointed in the general meeting.

6. Can the notice period of 3 months be reduced to one month? 

Reply- Noting mention in the section 168 of the companies act, 2013, regarding notice period of the director to be serve. However the director in the board meeting can express his opinion for not continuing as a director and his unwillingness to serve notice period.

Its upon the company then how to compensate from the director.

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