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All Directors Resigned; What to Do?

May 24, 2016     by Simratjeet Kaur

Section 149(1) of the Companies Act, 2013 provides that a minimum of 2 director, in case of Private Company and 3 in case of Public Company, should be present at all times for smooth functioning of the Company. But what to do when the minimum requirement of directors falls below the stipulated limit defined in the Act?

There can be two scenarios:

  1. When there is only 1 director remaining on the Board.
  2. When all the Directors have resigned from the Board.

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.

Generally the Companies where all the directors have resigned face a lot of difficulties while filing the forms for appointment of new directors. Filing of eforms on MCA portal requires digital signatures of the Authorised Signatory Director. When all the directors resign from the Board, there are no authorised signatory director left in the Company (due to deactivation of DSC of resigning director on filing of DIR-11). Therefore eform for appointment of new director can’t be filed.

MCA issued a clarification in this regard vide General Circular No. 3/2015 dated 3rd March, 2015. MCA clarified that in such scenario (as mentioned in scenario b.), the ROC may allow any one of the resigned director (who was an authorised signatory of the Company) to file the eform as applicable and subject to the compliance of other provisions of Companies Act, 2013.

37 thoughts on “All Directors Resigned; What to Do?

  1. In my Pvt Ltd company, few years before 3of them invested ans started in the mid time 2 director stops there activity in the company 1partner committed to retune there investment, in 2years that one person returns and settle the investment with interest is there any role continue for these 2 investors in the company

  2. Pvt co having 2 shareholder.
    Beneficial owner (holding Co) is disclosed by filing form. with ROC
    Now director has resigned.
    Do we need to get that share transferred from him to the other person, even though beneficial owner is already disclosed earlier?

  3. Can two directors resign from a pvt ltd company (The company has 3 directors) which was incorporated in 2015 October and still active? Can 2 directors resign now? No financials submitted for the company from the date of incorporation..

    1. Directors can resign anytime they wish to do so. Their resignation is not subject to acceptance. However, please note that the Act states that a director, who resigns from the company, shall still be liable for offenses committed during his tenure as a director.

    1. DIN can only be surrendered in the following two cases:
      1. if the DIN holder has never been appointed as director or
      2. DIN has never been used for filing any document with any authority
      Since in your case, you have been appointed as a director, therefore, you can’t surrender your DIN.

  4. As on 31st March, 2018 there were 5 directors in company (Producer Company).. In July /Aug 2018 3 directors submitted their simple resignation letters. Company also appointed 3 new directors in their place, but unable to submit DIR 12 for removal of directors due to non KYC. Further the directors are not responding for DIRKYC due to dispute, what is the best way to remove the directors ? We have already discussed with our CA but no response.,..

    1. The provisions of producer Company are governed as per Sec 465 of the Companies Act, 2013 (581O of Companies Act, 1956); minimum 5 and maximum 15 directors. In the present case, the Company seems to have on ROC record 8 present Directors since the resignation of Directors will not be updated until the filling of DIR-12. Due to non-filling of DIR-3KYC, the DIN status is de-activated, hence, we cannot file DIR-12 either. Our suggestion would be to have a word with the Directors and intimate them that since the Directors have not filed DIR-11, they can still be treated as ‘Officer in Default’ in case of any violation by the Company. In case this does not work out, then you can submit an application with the ROC pleading the present case and request for re-activation of their DIN for the purpose of filling DIR-12

  5. In an indian company all the indian directors have resigned and its run by foreign directors. What are the consequences and time limit for appointing indian director?

    1. 1.Nationality is not a barrier per se for being appointed as a director in an Indian company. However, under section 149(3) [Resident Director], Companies Act, 2013 which mandates every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year.
      2. However, there is no specific punishment provided for contravention of aforementioned section , but general penalty have been mentioned under section 172 [Punishment]of the Companies Act.
      3.As per circular(General Circular No. 25/2014 dated 26.06.2014). Companies incorporated after 30.9.2014 need to have the resident director from the date of incorporation itself.

  6. A company with 2 Directors of which 1 is Indian Director & the other is a Foreign Director. Bcoz of some internal issues the Indian Director resigned from the Board. The Foreign Director is not in India. What shall the company do in order to appoint new Director, and where shall the meeting be held. The same Directors are the only 2 shareholders of the company. Company has no other shareholder

    1. 1) As per our opinion, the best course of action will be , the remaining director to summon EGM and appoint director(s) to constitute required quorum in the Board.
      If calling EGM is not possible for any reason, the remaining director may call board meeting under section 174 (2) and can appoint additional director to constitute the required quorum in the board. Further, the additional director can be regularized in the coming AGM.
      Also note, appointing a resident director is mandatory.
      2) Board meeting can be held in the place where the quorum is physically present. In such case, except for the prohibited matters, director who is physically not available at the place of meeting can participate through Video Conferencing.

  7. Dear sir , one of Pvt LTD with only two directors , some dispute arised , and now one director has senr resignation. But another director not ready to accept , as such liabilities standing in the books. Also they have issued CCD and due in next 3-6 months. 1) can director resign without setteling liabilities.2) how to defend for this by remaining director. 3) can he complaint to ROC 4) can he also resign 5) can his form upload on site 5) if both directors resign then what happens to companies liabilities. Please advise

    1. Your query requires a detailed analysis of all the facts. Hence, we suggest you to seek a professional advice for your case.
      Nevertheless, we are here to serve you for your general queries.

  8. One of the director in a Pvt ltd compny was disqualified on 01.11.2016 due to one struck off compny. Now can his resignation resolution with dir12 be filed in today’s date or it must be filed around his disqualification date(01.11.16) with penalty?
    For appointing a new director in place of disqualified director: is can a director whose DIN is allotted in june 2018, be appointed as a director from November 2016 ?

    1. As the director was disqualified due to non-filing of the annual filing of the annual financial statement or annual return for a continuous period of three financial years, there is no requirement of filing of DIR 12, as his office was vacated as per the law.
      Furthermore, in accordance to Section 153 of Companies Act 2013, any director who intends to be appointed as a director of a Company must have a DIN, hence if the DIN was allotted in June 2018, he cannot be appointed from November 2016.

      1. Then how to appoint a director in November 2016, If company can’t appoint then how can a single director file annual filing of company of 2016-17 and 2017-18 ? Foe how many days a single director is allowed to run company. Pls suggest.

        1. You were required to appoint a director immediately after the vacation of office by the previous director. For further information kindly refer Section 174(2) of Companies Act 2013.

  9. All the directors of Pvt Ltd (100% subsidiary of a Foreign Co.) have resigned. Foreign company wants to abandon the Pvt Ltd, as it is. What are the duties of Foreign Company and it’s Board?

    1. As per sec. 168 (3) where all the Directors have resigned then the promoters or central government shall appoint the required no. of directors who shall hold office till the directors are appointed by company in general meeting. In given situation where foreign company wants to abandon it’s subsidiary company, be it striking off the name of company or transfer of shareholding, firstly appointment of directors on board is needed to finish the formalities.

  10. In private company one director is already disqualified out of two, what is the time period for appointing new director. Can Private Company run with one director for time being.

    Thanks in advance

    1. As per section 167(1)(a), the office of a director becomes immediately vacant if he incurs any disqualification specified in sec 164. Immediately after the vacation, the other director should summon a General Meeting only to appoint a new director and no other purpose (sec 174(2)).

  11. Mr.x resigned from the managing directorship of the company.He however wants to continue as a director in the company. Mr.x can continue as a director in the company?

    1. Yes he can continue as a Director in the Company. For that requisite resolution need to be passed by the Board subject to the approval of the members. Also, Form for change in designation needs to be filed with the ROC.

  12. Mr.x resigned from the directorship of the company.He however wants to continue as a director in the company. Mr.x can continue as a director in the company?

    1. Yes he can continue as a Director in the Company. For that requisite resolution need to be passed by the Board subject to the approval of the members. Also, Form for change in designation needs to be filed with the ROC.

  13. Sir,
    Can a promoter himself become a director if the company becomes directorless?If yes can he continue as director even after appointment of new directors in General meeting ? If promoter appoints directors can he appoint two directors at a time?
    Thank you

    1. In case the company becomes director less due to resignation or vacation, then the promoter shall appoint the required no. of directors who shall hold office till the directors are duly appointed by the company in general meeting only.

  14. Out of 3 directors in a. Pvt Ltd company, 2 wants to resign but the 3rd one is not ready to file form DIR 12. What to do in this case?

    1. The resigning directors must file DIR-11 with ROC with in 30 days from the date of resignation. The Directors who have resigned have performed their duty by filing DIR-11. Company, will bear the consequences for not filing DIR-12.

  15. Annual return of the year 2007 filed by a company wrongly shows 3 share holders with 5000 shares each with 15000 shares…instead of 2 share holders..with 10000 shares, however the transfer entry shown on the back side of that annual return is correct which shows 5000 shares have been transfered…In such case, is that annual return of 2007 considered as valid or invalid and if that is invalid can company file that annual return of 2007 again showing the correct no of share holders as 2 instead of 3?

    1. Any return with incorrect details is not treated as the valid submission of Statutory document. Company itself can go for NTBR (not to be taken in records) process to mark that form incomplete or defective and will file the revised annual return with fresh fees. NTBR application is to be made before MCA.

  16. sir, i am one of the share holder of a pvt ltd company.. My equity shares were illegally transfered in the year 2006 but that pvt ltd co. when i try to check the transfer entry in the Annual return of the yr 2006, it shows only form 20 b with an attachment of FILE1…which is totally blank…there is no annual return attached to that form 20 b.. under this circumstances, i cannot cross check any trasfer entry becoz the file1 is blank. can i complain about this to ROC to tell that pvt ltd company to again attach the annual return of 2006? what will happen to my share holdings becoz no transfer entry is shown and my shares have been transfered illegally?

  17. What is the maximum period within which promoters or CG, as the case may be, shall appoint directors in company? For how long a Company can practically work without directors?

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