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Resignation and Removal of a Director in a Company
The resignation of a director from the company is similar to resigning from a job or a post. Resigning from the job/post is his/her choice taken by the person with the intention to quit the role. However, the resignation of a director involves the presence of a director of the company conveying the same to the management team within the company. Another way of the resignation of the director involves providing a copy of the resignation letter by the director to the (ROC) registrar of companies, within an allotted period of time. Companies Act, 2013 has laid out a well-equipped system and procedures for the resignation of a Director, all the procedures for the resignation of the director are handled u/s 168 of the Companies Act, 2013.
Format of Director's Resignation Letter
Date: ββββ To The Board of Directors [Name of the Company] [Addressβββ-] Sub: Resignation Letter Dear Sir/Madam, I, βββββββ- R/o ββββββββββββββββββ, Respectfully, I would like to mention as a result of this my resignation from the office of the director of the company (XYZ). I must step down from my corporate directing post because of some personal and unavoidable disputes. Kindly accept this resignation letter as my resignation and grant me to discharge my duties. I request the Board of Directors to provide me with an acknowledgement of the concession and a copy of the E-form DIR-12 filed with the Registrar of Companies to that effect for my concern and narrative. Thanking You, Yours Faithfully Name of Director
Format of Resignation Acknowledgement Letter by the company
Date, Month, Year To --------- (Name of Resigning Director) Address. Subject: Acknowledgement of Resignation Dear Sir, In respect of your resignation letter dated _______. In this regard, the Board of Directors has endorsed your resignation w.e.f. ___________, in the Board meeting held on ___________. The Board of Directors of the company has admired your association and the support you offered during your working tenure. We wish you all the best for your upcoming future opportunity and happiness. Thanking you, Yours Faithful, For --------- Company, Director.
Company's Duty on Receiving the Resignation Letter of the Director
When the company receives the resignation letter of the director, and the Chairman of the Board has also got it, then a letter must be sent in the reply to the resigning Director that his/her resignation letter has successfully been received. The Company must also file with the registrar of the company (ROC) e-Form DIR-12 about the resignation of the Director from the Company. After the confirmation of the ROC in the subsequent Board Meeting, the letter of resignation of the Director is placed before the Board and that fact would be recorded in the minutes of the meeting.
Duty of Director while Providing Resignation Letter
This is a duty of a director to send a Copy of his Resignation letter together with the detailed reasons for providing a resignation to the Registrar of Companies (ROC) within 30 days of resignation by the filing of Form DIR.11 which should be signed with his/her Digital Signature.
Process for the Resignation of the Director?
Following is the procedure to resign from the post of directorship of the companyβ The first step is to prepare the resignation letter of the resigning Director. In the second step, the resigning individual has to furnish the submission of the resignation letter to the Board of the Company. Then Third, the Board of Directors accept the resignation letter by passing the resolution. After this, you will be required to file Form DIR-11 for the Notice of resignation with the registrar of the company (ROC). In the last step, File Form DIR-12 for the return of change in the Board of the Company.
The Process to Remove a Director
If a company decides to remove their director due to any strict reasons then the following are the steps to be followed to remove the director from the directorship. A notice should be prepared and drafted resolution(s) to be passed in the board meeting after receiving the resignation letter from the director. It is a must for the companies to inform the concerned director that he is being removed from his/her directorship. Let them know about the notice and Agenda of the Board meeting with the companyβs Directors within the prescribed time. To arrange a board meeting to reevaluate the removal of the concerned director and to provide the notice of the general meeting to the company members. It is crucial that a general meeting notice must be delivered to all the members at least 14 days before the general meeting date. Notice of removal of a director must be cleared 14 days before the concerned meeting, excluding the day on which the meeting is going to be convened and notice. A special notice is required of the company. It shall be signed, either individually or collectively, by a sufficient number of members holding not less than 1% of total voting power/holdings for which an aggregate sum of but no more than Rs.5 lakhs has indeed been paid as of the notice date. Convene a general meeting to allow the director to be heard and speak. Ordinary resolutions can be enacted if they are found coherent and equitable. Before passing any type of resolution, a director is permitted to speak about his/her opinion, and s/he is provided with a fair chance to the board. Ordinary resolutions can be enacted if they are found coherent and equitable. It is essential at last to prepare the relevant document and the notice to inform the resigning director.
Frequently asked questions
Can I be reappointed as a director once I am removed?
Who has to file form DIR12?
Is there any liability after the resignation of the Directorship?
Can a Company remove a director without his/her consent?
What is the Board Resolution for the Resignation of the Director?
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