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:
- When there is only 1 director remaining on the Board.
- 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.