Directors Resignation under Companies Act, 2013
February 8, 2018 by CS Samrish Bhanja
The resignation by a Director is not subject to acceptance by the Board. 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. (Section 168 of the Companies Act, 2013)
1. Directors intending to resign?
1.1 The Director intending to resign shall send notice in writing to the Company. They are to intimate the Registrar, about their resignation, by way of filing form DIR-11. However, a recent change has been introduced by Companies (Amendment) Bill, 2017 (yet to be notified) whereby filing of DIR-11 has been made optional now.
1.2 Non-Resident (NR) Directors: A NR Director can authorize specified persons to execute and file DIR-11 (form for informing the Regulator about his resignation). He need not file (and sign) himself. A NR director may authorize a Company Secretary in practice or any other Resident director of the company to sign Form DIR-11 and file the form on his behalf (Rule 16 of Appointment & Qualifications of Directors Rules).
1.3 Liability of the resigning director: The director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.
2. Companies to do the following (after having received the resignation):
2.1 Take note of the resignation:
The Board to take note of the resignation. However, there is no prescribed timeline for taking note of the resignation. The company can take note the resignation in its ensuing meeting. It is not necessary to hold a board meeting though. Per our understanding, it can be by way of Resolution by Circulation as well.
Read about Resolution by Circulation
You may also like to read about Meeting by Video conference
2.2 Duty to intimate Registrar:
The law has caste duty upon the Company to intimate the Registrar about the said resignation by way of filing form DIR-12. The following supporting documents shall be attached to the form DIR-12:
- Notice of resignation
- Evidence of cessation
The company shall file the said form within 30 days of the date of resignation along with the prescribed filing fees.
The company shall comply with Section 168 and Rules thereunder and additionally Section 175 (and Secretarial Standard SS-7 if the noting is done by way circular resolution).
3. Resignation by Managing Director
Resignation by a Managing Director is also not subject to acceptance by the Board. However, it primarily depends on the terms of appointment. There is an industry practice that the Managing Directors are appointed with terms mentioned in the resolution and powers clearly laid down in the form of a Power of Attorney.
Noting of resignation of Managing Director or whole-time director or Manager must be done in duly convened Board Meeting as per SS-7. Which means that noting of resignation cannot happen by way of Resolution by Circulation.
Related Link: All-directors-resigned-what-to-do