Change is the only constant thing. The Companies Act, 2013 (hereinafter referred to as the “New Act”) is a living example of that. Age old provision of the old Act has been rightly pruned in the correct places. One such example will be the resignation of directors as per Companies Act, 2013.

The office of the director can be vacated by various ways like, resignation, retirement, disqualification, etc. A director can resign from his office by way of giving notice in writing to the company. The Board shall take note of such resignation on receipt of the notice and intimate the Registrar in prescribed manner within specified time. The fact of such resignation may be presented in the next general meeting of the company. In this regard, it is to be clarified that there is no question of the “acceptance” of such resignation by the Board. The Board is only required to note the fact and update its records.  

Communication of resignation to company: 

The notice of resignation should be addressed to the Company and not to any officer of the Company.Notice addressed to any third party or officer is not effective.

Effective Date of Resignation:

The resignation becomes effective on the date it is received by the Company or date mentioned in the resignation letter, whichever is later. Hence, it can be safely concluded that since the resignation becomes effective immediately, hence the director concerned cannot withdraw his resignation, without the consent of the Company. Also, the date of filing of the relevant form (Form DIR- 12) is not relevant.

Liabilities of resigning director:

The director is liable for offences occurred during his tenure of office, even if he has resigned from office. Basically, resigning from directorship does not absolve you from the liabilities that were incurred during your term of office. Any offences that takes place after submission of the resignation of director does not make him liable, even if Form DIR-12 is not filed. The fiduciary duties of a director  also ceases the moment he resigns from the directorship of the Company.

Director can himself file copy of his resignation with the ROC (New):

This is a new concept that has been brought about by the Companies Act, 2013. We have seen in various cases, that Company or the Board has been misusing the powers and provisions of the Old Act. The BoD has completely denied the fact of submission of resignation letter or notice of resignation by the concerned director. The case can also be vice versa, where director has misused this loophole to serve his individual interest. It was a well known and established judgement that was passed in the case of Bhagchand Jain v. Provident fund Commissioner (1993) 33 CLA 318 (Cal HC). In this case, it was opined that a Director was required to prove his resignation.

But how does a Director prove that?

“By way of Filing Form DIR-11“. A director can forward a copy of his resignation to Registrar in prescribed manner within 30 days. This provision is specifically useful when there arises a dispute among directors and the director has apprehension that his resignation may not be filed by the Company with the Registrar.

Hence, now the Director also has the option of intimating their fact of resignation to the ROC and save their backs. This is a very welcome provision and indeed does away with much of the loopholes in the provisions of Resignation of Directors as per Companies Act, 2013.

 

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