FAQ On Resignation Of Director Under Companies Act, 2013

As a Company is an artificial person, thus it requires natural persons to manage, control, direct and oversee its affairs and management. A company can appoint directors up-to the maximum limit prescribed. For example an OPC and Private Limited Company can appoint maximum 15 directors. Likewise, a person can be director only up-to a maximum prescribed limit, such as an individual can become a director in maximum 20 private limited companies.

A director can resign at any time from the directorship of company by giving a resignation letter to the company along with the reasons for resignation. Section 168 of Companies Act, 2013 read along with Rule 15 & 16 of The Companies (Appointment and Qualifications of Directors) Rules, 2014 sets out the procedure for the Resignation of Director.

In this blog, we will discuss the procedure of Director’s Resignation and other concepts related thereto.

Table of Contents

How can the Company’s Director resign?

Section 168 of the Companies Act, 2013 deals with the resignation of company’s director. According to this section, a director can resign from his position by giving a notice of resignation to the company. Thereafter, the Board of Directors of the Company shall take note of such notice of resignation and thus the company shall pass a Board Resolution for the approval of resignation of the director.

What steps a company is required to take on receipt of the director’s Resignation?

As soon as the Company receives the Notice of Resignation or Resignation Letter from the Director, then the Company is required to undertake the following steps-

Convene the Board Meeting to take note of Resignation Letter

On receipt of Resignation Letter, the Company must send atleast 7 days prior Notice of Board Meeting to all the directors of the Company. However, a company can call a board meeting with shorter notice only in urgency or in the case of urgent business.
This notice must be accompanied with Agenda and Draft of Board Resolution.
Convene Board Meeting on the date specified in the notice of Board Meeting. In the Board Meeting, the Resignation will be accepted by the directors.

Intimate ROC by filing Form DIR-12

After the Board Meeting, the Company is required to intimate the Registrar of Companies (ROC) by filing Form DIR-12 with ROC within 30 days from the date of receipt of director’s Resignation. DIR-12 Form shall be attached with following documents –

Certified true copy of the Board Resolution
Notice of Resignation
Evidence of Cessation.

Whether Director is required to intimate ROC about is resignation?

Yes apart from the company, a Director is also required to intimate the ROC about his Resignation by filing Form DIR-11 within 30 days from the date of resignation. Form DIR-11 Form shall be attached with the following documents –

Notice of Resignation filed with the Company
Proof of Dispatch
Acknowledgement received from the Company

Is it mandatory for a Company to accept the Resignation of Director?

As discussed, Section 168 deals with the procedure of Director’s Resignation from the Company. This Section does not require that the resignation should be accepted. Thus, the Board of Directors is mandated to take note of resignation in Board Meeting and to pass Board Resolution to effect the resignation.

From which date the resignation shall be valid?

According to the Section 168(2) of the Companies Act, 2013, the resignation of resignation of director shall be effective from

The Date on which such notice of resignation is received by the company, or
The date which is specified by the director in the resignation letter

What are the Liabilities of a Resigning Director?

According to Section 168(2) of the Companies Act, 2013, a resigning director shall be liable for the acts or offenses done during his tenure only.

What is the fee applicable on DIR-11 and DIR-12?

Following fee is applicable on the e-filing of both DIR-11 and DIR-12-

SHARE CAPITAL	APPLICABLE FEE
1,00,000 to 4,99,999	Rs. 300/-
5,00,000 to 24,99,999	Rs. 400/-
25,00,000 to 99,99,999	Rs. 500/-
I,00,00,000 and above	Rs. 600/-

In case, the Director or Company fails to file the DIR-11 or DIR-12 respectively within the prescribed time-limit, then the Director or Company shall pay an additional fee as mentioned below-

Period of Delay	ADDITIONAL FEE
Up to 30 days	2 times of normal fees
More than 30 days and up to 60 days	4 times of normal fees
More than 60 days and up to 90 days	6 times of normal fees
More than 90 days and up to 180 days	10 times of normal fees
More than 180 days	12 times of normal fees

Conclusion

We hope all of your doubts relating to the resignation of a director from the company are resolved. In case of any further assistance in filing your Director’s Resignation then contact Your Trustworthy Advisors Manthan Experts by dialing +9643-969-969 or mail us at info@manthanexperts.com. Our Experts Team will guide through the entire process and help you comply.

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