What happens when all directors of a company resign altogether

What happens when all directors of a company resign altogether? Imagine a super hit show. Prime time slot…top actors…award winning directors…! Done? Ok…now what happens when the directors and actors leave the show? Does the show end? A big NO (in CAPS). As they say in showbiz…the show must go on. Now replace the show with a company incorporated under the relevant Companies Act. Replace the crew with the directors. Done? Now, we have a company in our hands. A company where there is no director! Will the company stop operating? A big NO again (in CAPS)as one of the main characteristics of the company is PERPETUAL SUCCESSION which in other words mean “Member may come and member may go but company goes on as the company has a life distinct from its members”. Nothing is different in the corporate arena. A new set of Directors will be appointed. They would keep up the legacy. 

Happy story…happy ending! Wrong! Here comes bureaucracy! We did not invent it in this country…we literally perfected it! Whenever a new director is appointed, we have to intimate it to the Registrar of Companies. Prepare DIR 12, sign it with the Digital Signature Certificate (DSC) of the authorized signatory and file it. So far so good. But what happens in the abovementioned case? All the Directors have resigned. We have appointed new Directors by passing Board Resolution and obtaining their consent. But the entire process is incomplete till we record the same with the ROC by filing DIR 12. Now how do we file DIR 12? Who is the authorized signatory? Whose DSC would be used?

Exactly these are the questions constantly troubling the stakeholders in all such cases. As a result of this discrepancy, most of the companies have become non-compliant and pile of additional fee just goes on increasing. As per the Companies(Amendment)Act,2017 which was effective from 7th May 2018, states thatthe resigning directorhas in its own discretion or in other words has the option of intimating the fact of their resignation to the ROC by filing DIR-11. Once the Directors file DIR-11, their DSCs are automatically deactivated as per the MCA records. Such DSCs can no longer be used for e-filing of any form (including that of DIR 12) of the said company.


The stakeholders have been constantly raising their grievances about this issue with the MCA. In order to resolve this issue and enable the filing of e-formDIR 12, the MCA with reference  to Section 168(3)of Companies Act, 2013, clarified that the Registrar of Companies within their respective jurisdictions are authorized, on request of stakeholders, and after due examination, to allow any one of the resigned director who was an authorized signatory, for the purpose of filing DIR 12 only along with additional fees, as applicable and subject to compliance of other provisions of Companies Act, 2013.

This indeed is a welcome move. We highly appreciate the intent of the Government for facilitating governance mechanism for corporate. However, as I mentioned earlier, we perfected bureaucracy. How this will be implemented is the main thing that is yet to be seen.





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