{"id":107056,"date":"2022-03-22T16:30:09","date_gmt":"2022-03-22T11:00:09","guid":{"rendered":"https:\/\/legalwindow.in\/?p=107056"},"modified":"2023-01-02T11:54:33","modified_gmt":"2023-01-02T06:24:33","slug":"resignation-of-director-under-companies-act-2013","status":"publish","type":"post","link":"https:\/\/www.legalwindow.in\/blog\/resignation-of-director-under-companies-act-2013\/","title":{"rendered":"Resignation of Director under Companies Act 2013"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-107063\" src=\"https:\/\/legalwindow.in\/wp-content\/uploads\/Resignation-of-Director-under-Companies-Act-2013-1.png\" alt=\"Resignation of Director under Companies Act 2013\" width=\"1200\" height=\"630\" srcset=\"https:\/\/www.legalwindow.in\/blog\/wp-content\/uploads\/Resignation-of-Director-under-Companies-Act-2013-1.png 1200w, https:\/\/www.legalwindow.in\/blog\/wp-content\/uploads\/Resignation-of-Director-under-Companies-Act-2013-1-600x315.png 600w, https:\/\/www.legalwindow.in\/blog\/wp-content\/uploads\/Resignation-of-Director-under-Companies-Act-2013-1-300x158.png 300w, https:\/\/www.legalwindow.in\/blog\/wp-content\/uploads\/Resignation-of-Director-under-Companies-Act-2013-1-1024x538.png 1024w, https:\/\/www.legalwindow.in\/blog\/wp-content\/uploads\/Resignation-of-Director-under-Companies-Act-2013-1-768x403.png 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">A director may resign from his office by giving written notice to the <\/span><span style=\"font-weight: 400;\">Company<\/span><span style=\"font-weight: 400;\">, and upon receipt of such notice, the Board shall take note of it, and the Company shall notify the Registrar, as well as include the fact of such resignation in the report of directors laid before the Company&#8217;s immediately following <a href=\"https:\/\/legalwindow.in\/process-of-extension-of-holding-annual-general-meeting\/\" target=\"_blank\" rel=\"noopener\">General Meeting<\/a>. We\u2019ll discuss the Resignation of Director under Companies Act, 2013 in detail in this article.<\/span><\/p>\n<table style=\"width: 100%;\">\n<tbody>\n<tr>\n<td style=\"border: 1px solid #555;\"><b>Table of Content<\/b><\/p>\n<ul>\n<li aria-level=\"1\"><a href=\"#Who\">Who is Director of a Company?<\/a><\/li>\n<li aria-level=\"1\"><a href=\"#Necessary\">Necessary Requirements for the procedure of Resignation of Director under Companies Act 2013<\/a><\/li>\n<li aria-level=\"1\"><a href=\"#Manner\">Manner of the Resignation of Director<\/a><\/li>\n<li aria-level=\"1\"><a href=\"#Resignation\">Resignation Effective Date<\/a><\/li>\n<li aria-level=\"1\"><a href=\"#The\">The procedure of Resignation of Director under Companies Act 2013<\/a><\/li>\n<li aria-level=\"1\"><a href=\"#Opinion\">Opinion of Judiciary<\/a><\/li>\n<li aria-level=\"1\"><a href=\"#Endnote\">Endnote<\/a><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 id=\"Who\"><b>Who is Director of a Company?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Directors are the members of the collective body and they act as the Board of Directors who is in charge of overseeing, managing and directing a company&#8217;s operations. Directors are trustees of the company&#8217;s property and money, and they also function as the company&#8217;s agents in transactions they enter into on its behalf.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A director controls and manages the company&#8217;s affairs. He\/she serves in a variety of capacities inside the organization. As a result, a director serves in various capacities in a company: as an agent, an employee, an officer, and a trustee.<\/span><\/p>\n<h2 id=\"Necessary\"><b>Necessary Requirements for the procedure of Resignation of Director under Companies Act 2013<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The following are the necessary requirements for the procedure of Resignation of Director under the <\/span><span style=\"font-weight: 400;\">Companies Act, 2013<\/span><span style=\"font-weight: 400;\">:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A director&#8217;s resignation takes effect from the day, from which the company receives the notice, or on the date stated by the director in the notice, whichever is later.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The departed director is accountable for the offences committed during his term even after his retirement.<\/span><\/li>\n<\/ul>\n<h2 id=\"Manner\"><b>Manner of the Resignation of Director\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">According to Section 168(1) of the Companies Act, 2013, a director may resign from his office by giving written notice to the company, and the Board shall take note of the same and the company shall notify the Registrar in such manner, within such time, and in such form, as the case may be, and shall also include the fact of such resignation in the company&#8217;s report of directors laid in the immediately following general meeting. Moreover,\u00a0a director may also send a copy of his resignation, along with specific reasons for the resignation, to the Registrar within thirty days after his resignation in the manner required.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In basic terms, a director may quit by giving written notice to the company, and upon receipt of the notice of resignation, the company will notify the <a href=\"https:\/\/legalwindow.in\/roc-company-anuual-filing\/\" target=\"_blank\" rel=\"noopener\">Registrar of Companies<\/a>, following which the company will present all facts and reports at the next public meeting.<\/span><\/p>\n<h2 id=\"Resignation\"><b>Resignation\u2019s Effective Date<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The effective date of resignation should be the most recent of the following two dates:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The date on which the company receives the notice; or\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The date stated by the director in the notice.<\/span><\/li>\n<\/ul>\n<h2 id=\"The\"><b>The procedure of Resignation of Director under Companies Act 2013<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The following procedure should be followed by the Director to proceed with its Resignation:<\/span><\/p>\n<ul>\n<li><b>Convene a Board of Directors Meeting [as per Section 173 and Secretarial Standard-1 (SS-1)]<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Upon receipt of the resignation letter, the Company should send a Notice of Board Meeting to all of the Company&#8217;s Directors at their registered addresses at least 7 days before the date of the Board Meeting. A shorter notice might be granted in case of urgent <\/span><span style=\"font-weight: 400;\">business<\/span><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Include the Agenda, Agenda Notes, and Draft Resolution with the Notice.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Call a meeting of the Company&#8217;s Board of Directors to discuss the resignation letter presented by the Company&#8217;s Director.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To permit the Company&#8217;s CS, CFO, or any Director to submit the required Form and Return with ROC.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Listed Company should notify the Stock Exchange of such resignation within 24 hours of the date of the Board Meeting and post the same on the Company&#8217;s website within two working days. [SEBI (LODR) Regulations, 2015, Regulations 30 &amp; 46(3)].<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Prepare and circulate Draft Minutes to all Directors for comments within 15 days following the completion of the Board Meeting, via Hand\/Speed Post\/Registered Post\/Courier\/E-mail.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Form DIR-12 submission to ROC: <\/b>Within thirty days of receiving the director&#8217;s notice of resignation, the firm must notify the ROC in Form DIR-12, together with the accompanying documents:\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A certified authentic copy of the Board Resolution;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">\u00a0A notice of resignation; and\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Evidence of cessation.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Making mandatory Entries in the Board of Directors&#8217; Register: <\/b>The company should include the essential information in the Register of Directors and Key Managerial Personnel.<\/li>\n<li><b>Submission of Application: <\/b>Submit a necessary amendment Application under the Acts\u00a0below:<\/li>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Goods and Services Act<\/span><span style=\"font-weight: 400;\">;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Shops and Establishment Act;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Factories Act;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Foreign Exchange Management Act;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Inter-State Migrant Workmen\u00a0Act;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Private Security Agency Act;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">EPF; and\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">ESI,<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Other Labor Laws \u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Industry Specific Laws<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 id=\"Opinion\"><b>Opinion of Judiciary<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The court held in State of Karnataka v. Pratap Chand &amp; Ors. that the Director is only liable when he is accountable for the company&#8217;s activities and acts done with his agreement and connivance. As a result, if the directors can demonstrate the same, they can be released from personal liability. However, the provisions have been tightened.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">High-profile executives on the board of Nirav Modi&#8217;s organization included Sanjay Rishi (American Express president), Gautham Mukkavilli (former Pepsi Co-executive), and Suresh Senapathy (former Wipro CFO). The majority of them chose to quit as a result of the deception. Although independent directors are seldom accountable and they do not find their involvement in day-to-day operations, the (<a href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/home.html\" target=\"_blank\" rel=\"noopener\">MCA<\/a>) is in the process of holding them liable, assuming that they are aware of the company&#8217;s dealings. After being identified in the CBI&#8217;s FIR, two independent directors from IDFC resigned.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Their argument was that as part-time directors, their influence in the process was restricted; nonetheless, the ex-deputy MD was detained for lending loans to bankrupt firms.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0If found guilty, the directors might be accountable even after they retire. The departure of Independent Directors might serve as a warning sign to shareholders that there has been some mismanagement or unethical behaviour. It may have an impact on the company&#8217;s investment, including <\/span><a href=\"https:\/\/legalwindow.in\/current-situation-on-fdi-policies-in-india\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Foreign Direct Investment<\/span><\/a><span style=\"font-weight: 400;\">. The board of directors is one of the factors that investors consider when deciding whether or not to invest in a company.<\/span><\/p>\n<h2><a href=\"https:\/\/legalwindow.in\/contact\/\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-109471 size-full\" src=\"https:\/\/legalwindow.in\/wp-content\/uploads\/ResignRemove-a-Director-in-any-Company-starting-from-2500-..png\" alt=\"Liability of Director Under Negotiable Instruments Act 1881\" width=\"1000\" height=\"200\" srcset=\"https:\/\/www.legalwindow.in\/blog\/wp-content\/uploads\/ResignRemove-a-Director-in-any-Company-starting-from-2500-..png 1000w, https:\/\/www.legalwindow.in\/blog\/wp-content\/uploads\/ResignRemove-a-Director-in-any-Company-starting-from-2500-.-600x120.png 600w, https:\/\/www.legalwindow.in\/blog\/wp-content\/uploads\/ResignRemove-a-Director-in-any-Company-starting-from-2500-.-300x60.png 300w, https:\/\/www.legalwindow.in\/blog\/wp-content\/uploads\/ResignRemove-a-Director-in-any-Company-starting-from-2500-.-768x154.png 768w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/a><\/h2>\n<h2 id=\"Endnote\"><b>Endnote<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The Board of Directors establishes the vision and long-term goals of the organization. This comprises both the plan for achieving the goal and the monitoring of the strategy&#8217;s implementation. Directors are responsible for ensuring that the organization complies with all applicable laws and stays financially stable.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A director may resign from his office by giving written notice to the Company, and upon receipt of such notice, the Board shall take note of it, and&hellip;<\/p>\n","protected":false},"author":5,"featured_media":107064,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26],"tags":[],"class_list":["post-107056","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-compliance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Resignation of Director under Companies Act 2013 &#187; Legal Window<\/title>\n<meta name=\"description\" content=\"Latest Guide on Resignation of Director under Companies Act 2013. 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