How can Director of a company resign if Board does not accept resignation?

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    • #329
      Anonymous
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      How is it possible for a director of a company to resign from his post of director, if the board of directors does not accept his resignation? Can he forcibly leave or vacate his office without permission from the board?

    • #330

      Unlike the previous Companies Act, 1956, the new Companies Act, 2013 contains a specific provision for “Resignation of director” in Section 168 of the new Act. This section is reproduced below:

      168. Resignation of director.—(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 shall 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.”

      It is pertinent to point out that Section 168 of the new Companies Act, 2013, has been brought into force w.e.f. 1 April 2014 [vide Notification No. S.O. 902(E), dated 26-3-2014]. So, this section is applicable already.

      It is clearly seen from this section that a director of a company may resign from his office by giving a notice in writing to the company. It has been made binding on the Board of the company to take note of such notice of resignation, and further, it is binding on the company to intimate the Registrar about such resignation. Such intimation to the Registrar has to be given in such manner, within such time and in such form as may be prescribed under rules. In fact, the director who is resigning, is also required to 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 by rules.

      Moreover, it is also laid down in the said section that the resignation of a director shall take effect from the date on which the notice (for resignation) is received by the company or any other date, if any specified by the director in the notice, whichever is later.

      In view of the above, it appears that the resignation of a director, under the new Companies Act, is not subject to approval of the Board and it automatically comes into effect from the date mentioned above. However, a director who has resigned shall be liable, even after his resignation, for the offences which occurred during his tenure.

      It is also noteworthy that a company may lay down certain additional / supplemental provisions relating to the resignation by a director in the Articles of Association of the company.

           


      Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.

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