Amended and updated notes on section 168 of Companies Act 2013. Detail discussion on provisions and rules related to resignation of director.
Chapter XI (Sections 149–172) of the Companies Act, 2013 (CA 2013) deals with the provisions related to appointment and qualifications of directors. Section 168 of CA 2013 provides for resignation of director.
Recently, we have discussed in detail section 167 (Vacation of office of director) of CA 2013. Today, we learn the provisions of section 168 of Companies Act 2013.
The provisions of section 168 are effective from 1-April-2014. You may refer Notification No. S.O. 902(E) issued dated 27.03.2014. In this article, you will learn detail of the provisions of section 168 of the Companies Act 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014.
There was no provision for the resignation of directors in the Companies Act, 1956. The CA 2013 has prescribed a detailed procedure for effecting the resignation of Director which was not there in erstwhile CA 1956. In this guideline, we shall learn the detail procedure for resignation of a director from a company in compliance with the provisions of Section 168.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | XI |
| Chapter Name | Appointment and Qualifications of Directors |
| Section No. | 168 |
| Section Name | Resignation of director |
| Monthly Updated Edition | Company Law PDF |
Procedure for Resignation of Directors
Resigning from the office of Director must be done with proper legal documentation, board resolution, intimation and filing of prescribed forms with Registrar of Companies i.e. ROC.
Step-1: Notice of resignation by Director
Step-2: Board will pass a Resolution in Board Meeting
Step-3: Company intimate ROC
Step-4: Director forward copy of resignation to ROC
Step-5: If all Directors resign, then promotor or CG may appoint required director.
Notice by Director to Company [Section 168(1)]:
In accordance with Section 168(1) of CA 2013, a director may resign from his office by giving a notice in writing to the company. However, there is no format has been prescribed for such notice to be given by director intending to resign from his office. Thus, you may write a notice for resignation as per general conception and knowledge.
Sample Format of Resignation Letter of Director
Date:
To
The Board of Directors
[Name of the Company]
[Address of the Company]
Sub: Resignation from the Directorship
Dear Sir,
Due to my personal and unavoidable circumstances or pre-occupation elsewhere [Reason of Resignation], I am not in a position to devote my time to the affairs of the Company. Accordingly, I hereby tender my resignation as Director/ Managing Director (MD)/ Whole-time Director of the company with immediate effect [OR you may specify any particular date of resignation].
I request the Board of Directors to accept this letter as my resignation from the post of Director of [Name of Company], and relieve me of my duties.
Kindly acknowledge the receipt and arrange to submit the necessary relevant forms with the office of the Registrar of Companies, [Name of concerned State] to that effect, accordingly.
Thanking You
Yours Faithfully,
[Signature of Director]
[Name of Director]
[DIN Number of Director]
[Address of Director]
Duty of Company in case of Resignation by Director [Section 168(1)]
On receipt of such notice of resignation by director, the Board shall take note of the same by passing a board resolution to that effect. I am providing you a sample Board Resolution for taking effect to the resignation of director of a company. I hope it will enable you to understand the provisions.
Board Resolution for taking note of Resignation
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF [Name of Company] IN THEIR MEETING HELD ON [Date and Time of board meeting] AT [Address]
RESIGNATION OF MR. [Name of Director] AS DIRECTOR
“RESOLVED THAT resignation of Mr. [Name of Director] as Director, from the Board of Directors of the Company, be and is hereby accepted with effect from _________________.
FURTHER RESOLVED THAT for the purpose of giving effect to this resolution, Mr. [Name of Authorised Person], Director of the Company be and is hereby authorised to do all acts, deeds, matters and things as deem necessary, proper or desirable and to sign and execute all necessary documents, applications and returns along with filing of necessary E-form with the Registrar of Companies, [Address of ROC].”
Certified True Copy
For [Name of the Company]
(Name of Director)
Director
[Address of the Company]
DIN Number:
Thereafter, the company shall intimate the Registrar by filing Form No. DIR-12 within 30 days from the effective date of resignation.
Note that the company shall also place the fact of such resignation in the Report of Directors laid in the immediately following general meeting by the company.
Resignation Acceptance Letter by the Company
To,
[Name of Director]
Address:
Subject: Acknowledgement of Resignation
Dear Sir,
This has reference to your resignation letter dated _________. In this regard, please be informed that, the Board of Directors have approved your resignation w.e.f. __________, in the duly held Board meeting dated _______________.
The Board sincerely appreciated your association with the Company and the support which you have rendered during your tenure. We would like to wish you all the best with respect to your future.
Thanking you,
Yours Faithfully
For [Name of the Company]
(Name of Director)
Director
DIN Number:
Duty of Director in case of Resignation [Proviso of Section 168(1)]
In compliance with the proviso of sub-section (1) of Section 168 of the CA 2013, a director shall also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar within 30 days of resignation in such manner as may be prescribed.
What is the Effective date of Resignation of Director?
As per section 168(2), the resignation of a director shall take effect from:
i) the date on which the notice is received by the company; or
ii) the date, if any, specified by the director in the notice, whichever is later.
Liability of Director after Resignation [Proviso of Section 168(2)]
The director who has resigned shall not be held liable for liabilities incurred by the company after his resignation. However, the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.
In Case all Directors Resign from Directorship [Section 168(3)]
According to Section 168(3) of CA 2013, where all the directors of a company:
i) Resign from their offices; or
ii) Vacate their offices under section 167,
the promoter or, in his absence, the Central Government shall appoint the required number of directors.
Note that such appointed directors shall hold office till the directors are appointed by the company in general meeting.
Section 168 of Companies Act 2013: Resignation of director
Section 168 shall come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014.
(1) A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company:
Provided that a director may also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar within thirty days of resignation in such manner as may be prescribed.
(2) 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:
Provided that the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.
(3) Where all the directors of a company resign from their offices, or vacate their offices under section 167, the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in general meeting.
Exception/ Modification/ Adaptation:
1) In case of a Specified IFSC public company, in Proviso to sub-section (1) of section 168, the word “shall” read as “may”. –Notification No. G.S.R. 08(E) dated 4th January, 2017.
2) In case of a Specified IFSC private company, in proviso to sub-section (1) of section 168, for the word “shall” read as “may”. –Notification No. G.S.R. 09(E) dated 4th January, 2017.