Resignation of Director – Complete Procedure & Format

Introduction

The term “directors” typically refers to individuals who collectively constitute the Board of Directors of a company. The Board of Directors is responsible for directing, controlling, and managing the business and affairs of the company. Directors exercise the powers of the company on behalf of its shareholders or members. A director has the right to resign from their position at any time.

However, if the director holds a service contract with the company, such as being a managing director or whole-time director, the resignation must comply with the terms and conditions outlined in the contract. Section 168 of the Companies Act 2013 outlines the regulations governing the resignation of directors.

A director can resign from their position by providing written notice to the company. Upon receiving this notice, the Board of Directors must acknowledge and record the resignation. The resignation of a director becomes effective from the date on which the notice is received by the company, or from any date specified by the director in the resignation notice, whichever is later.

In this Article, let us understand the Compliance Checklist, Procedural Aspects, Documents Checklist, Template of Resignation Letters, Applicable Forms, and Fees with respect to the resignation of Director.

Mandatory Requirements

• Resignation by director shall be in writing

The resignation of a director must be in writing, as stated in Section 168(1) of the Companies Act 2013. Verbal resignations are not considered valid. However, resignations communicated via email or fax are acceptable forms of written communication and are therefore valid. When submitting a resignation, the director should address it to the registered office of the company, preferably to the board of directors. Upon receiving the resignation notice, the board takes note of the same.

• Intimation by the Company

The Company shall within 30 days from the date of receipt of notice of resignation from the Director intimate the registrar by filing E-Form DIR-12 . Additionally, if the company has a website, it should also post information about the resignation on its website.   The fact that the director has also resigned should also be stated in the Board’s Report which will be placed at the immediately following general meeting of the company.

• Copy of Resignation by Director

The Director now has the option to submit a copy of their resignation, along with detailed reasons for resigning, to the Registrar using E-Form DIR-11 within 30 days from the date of resignation. This change was made by the Ministry of Corporate Affairs (MCA) through a notification, replacing the mandatory requirement indicated by “shall” with an optional one, denoted by “may.”

• Liability of Director after resignation

Once a director informs the company about their resignation and the company receives the notice, the director is no longer responsible for any actions taken by the company after that date. The resignation is considered complete for the director at this point. However, the director remains liable for any actions that occurred during their time as a director, even after resigning.

• Resignation of all directors from the company

In the event that all directors of a company resign or vacate their offices under Section 167, the responsibility falls on the promoter or, in their absence, the Central Government, to appoint the necessary number of directors who will serve until new directors are appointed by the company in a general meeting.

Procedure for Resignation of Director

• Forward Resignation Letter to the Company

The Director shall forward his resignation by a Notice in writing stating the detailed reasons for the resignation to the Company.

• Prepare and Issue a Notice of Board Meeting

Prepare and issue notice and agenda calling Board Meeting to all the directors at least seven days before the date of the Meeting.

• Convene a Board Meeting

Hold a Board meeting and pass a Board Resolution for taking note and acknowledgment of the resignation from the director and authorize any director or CS or CFO of the company to file requisite form with ROC.

• Acknowledgment to the Director

The company after taking note and acknowledgement of the resignation of the concerned director intimate the same to the director.

• Intimation to Stock Exchange in case of listed Company

For listed companies, disclosure of resignation of directors must be submitted to the stock exchange within 24 hours from the date of the Board meeting and the same information must be posted on the company’s website within 2 working days.

In the event of the resignation of an independent director from a listed company, detailed reasons for the resignation must be disclosed to the stock exchange within 7 working days from the resignation. Additionally, the independent director must confirm that there are no other material reasons for the resignation apart from those provided.

• Preparation and Circulation of Draft Minutes

The minutes should be drafted and circulated within 15 days from the conclusion of a board meeting to all directors so that they can provide their comments, if any, within 7 days from the date of circulation of the draft minutes.

• Filing of E-Form DIR 11

Where a director resigns from his office, he may within a period of thirty days from the date of resignation, forward to the Registrar a copy of his resignation along with reasons for the resignation in Form DIR-11.

• Filing of E-Form DIR-12

The company shall file E-Form DIR 12 along with the necessary attachments with ROC within 30 days from the date of receipt of such notice of resignation 

It’s essential to note the distinction between DIR-11 and DIR-12 filings. DIR-11 is a form filed by the director, and it is optional. On the other hand, DIR-12 is a form that must be compulsorily filed by the company.

If a director voluntarily submits DIR-11 but the company fails to file DIR-12, an email notification will be sent to the company requesting the filing of Form DIR-12. Once confirmation of submission is received, the status will be updated accordingly.

• Posting the information on the website

If the company has a website, it should also post information about the resignation on its website.

• Entry in the Register of Directors and KMP

Make an entry in the register of directors & KMP as per Rule 17 of the Companies (Appointment & Qualification of Directors) Rules, 2014 immediately.

• Disclosure in the Board’s Report

It is required to disclose the details of directors who have resigned during the year in the Board’s Report.

Details and Documents Checklist

Following is the broad list of details and documents required-

Director Resignation Letter Format

Date:

From

[Director’s Name]

[Director’s Address]

To,

Board of Directors

[Company Name]

[Company Address]

Sub: Resignation as Director of _______________________

I am writing to formally tender my resignation from the position of Director at [Company Name], effective from [Effective Date], due to personal reasons.

It has been a privilege to serve on the board and contribute to the growth and success of [Company Name]. I am grateful for the opportunities and experiences I have gained during my tenure.

Kindly accept this letter as my formal resignation, and I request you to complete the necessary formalities to notify the Registrar of Companies accordingly.

Thank you for your understanding and support.

Sincerely,

[Signature]
[Director’s Name]
[DIN: Director Identification Number]

Board Resolution

The Chairman informed the Board that Mr. ___________________________  (DIN: 0943 xxxx) has resigned from the Board of the Company due to ____________ reasons. Thereafter, he placed the resignation letter before the Board for its consideration. 

 The Board discussed the matter and passed the following resolution:

“RESOLVED THAT the resignation dated [resignation date] received from Mr./Ms. [Name] from the directorship of the company, with effect from [resignation effective date], a copy of the same is tabled before the meeting, be and is hereby noted and accepted.

RESOLVED FURTHER THAT the Board places on record its appreciation for the assistance and guidance provided by Mr./Ms. [Name] during his/her tenure as Director of the Company;

RESOLVED FURTHER THAT any Director  be and is hereby authorized on behalf of the Company to sign and execute all necessary documents, applications, and returns and  to do all such acts, deeds, matters, and things as are deemed necessary, proper, and desirable, for the purpose of giving effect to the aforesaid resolution.”

Applicable Forms & Penalty

E-Form DIR-12

• E-Form DIR-12 (Application for particulars of appointment of directors and the key managerial personnel and the changes among them) is required to be filed by the Company within 30 days from the date of appointment/ cessation/ change in designation.

• Government fees for filing E-Form DIR 12 with the Registrar:

In case of a company without share capital, the fee applicable is Rs 200.

• Additional government (ROC) fees in case of delay in filing E-Form DIR-12:

• Penalty for not filing E-Form DIR 12:

If a company fails to comply with the provisions of this Chapter (Appointment and Qualifications of Directors) and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of Rs.50,000, and in case of continuing failure, with a further penalty of Rs 500 for each day during which such failure continues, subject to a maximum of Rs 3,00,000 in case of a company and Rs 1,00,000 in case of an officer who is in default.

E-Form DIR-11

Form No. DIR-11 (Application for notice of resignation by Director) can be filed by the Director within 30 days from the date of resignation. In the case of a foreign director, this E-Form can be submitted by a practicing professional or any other resident director who shall be authorized by such foreign director in writing.

• Government fees for filing E-Form DIR 11 with the Registrar:

In the case of a company without share capital, the fee applicable is Rs 200.

• Additional government (ROC) fees in case of delay in filing E-Form DIR-11:

Conclusion

Section 168(1) of the Companies Act 2013 states that a director has the right to resign from their position by providing written notice to the company. Upon receiving the resignation, it is the responsibility of the company to inform the Registrar by filing Form No. DIR 12 and, if applicable, publishing the information on its website. Additionally, the resigning director must submit a copy of their resignation, including detailed reasons, to the Registrar within thirty days using E-Form DIR-11. It is always advisable to complete all the required filings with ROC in order to avoid penalties.

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