Sec 168 of the Companies Act, 2013: How can Director resign from a Company?
Updated: Oct 4, 2022
The Companies Act of 2013's Section 168 provides a clear explanation of the resignation of directors, which was missing from the original Act of 1956. A director may resign from their position by giving the company a written notice of their intent to do so, and the Board shall take such notice into consideration. Within 30 days, the Board must send a DIR-12 intimidating the ROC of such notice received by the director. The Director may, at his discretion, use Form DIR-11 to send the ROC, a copy of his resignation letter and a statement of reasons for the resignation. An email or a letter to the company is also a valid mode of communication.
Effectiveness of Director’s resignation: A director's resignation is effective as of the later of the date the company receives the notice or the date, if any, specified by the director in the notice. When a director steps down and the board accepts his resignation, the director is no longer responsible for any liabilities the company incurs after the resignation was accepted. But the liability of such a resigning director even after his resignation shall extend to all the offenses which occurred during his tenure.
A director’s resignation, under section 168, involves providing a resignation letter or notice to company management or the board. The board, in turn, will notify the Registrar of Companies (ROC) within the prescribed time. The director also has to file a copy of the resignation letter or notice with the Registrar of Companies (ROC), along with the reasons behind the resignation in form DIR11.
Lastly, where all the directors of a company resign from their office, the Central Government shall appoint such a required number of directors who shall hold office until the directors are appointed by the company in the general meeting.