Section 168, the Companies Act, 2013: Resignation of Directors

Section 168, the Companies Act, 2013: Resignation ofdirectors Corresponding sections of the Companies Act, 1956: None this is anewly introduced section.

DIRECTORS RESIGNATION UNDER COMPANIES ACT, 2013:-

1. TheDirector intending to resign shall sendnotice in writingto theCompany. 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.

2. Thedirector who has resigned shall be liable even after his resignation for theoffences which occurred during his tenure.
3. The lawhas caste duty upon the Director Resigning,toFile Form DIR- 11(Company shall file form DIR 12) and

• Mention therein the Reason for Resigning.
• Enclose the copy of Notice sent to the Company.
• Enclose Proof Of Dispatch.
• File the said form within 30 days of resignation along with theprescribed filing fees.

Thereiswarning noteat the endof the form which states as follows:

Note: Attention is also drawn toprovisions of Section 448 and 449 which provide for punishment for falsestatement and punishment for false evidence respectively. These sections 448and 449 relate to punishment for committing fraud or giving false evidence andthese arenon-compoundable offences.

Duty ofCompany in case of Resignation by Director As per section 168 (1):

A directormay resign from his office by giving a notice in writing to the company and theBoard. The company shall on receipt of such notice

–Take note of the same by passing a board resolutionto that effect and

– As per Rule 15 of Companies (Appointment and Qualification of Directors)Rules, 2014 the company shall intimate the Registrar through Filing Of FormDir.12 Within 30 Days From The Effective Date of Resignation on itswebsite, if any.

– Company is also required to Place the Fact of SuchResignation in the Report of Directors laid in the immediately following generalmeeting by the company.

Duty of Resigning Director in case of Resignation:

A directorshall also forward a Copy of his Resignation Along With Detailed Reasonsfor the resignation to the Registrar within 30 (Thirty) days of resignationthrough filing of Form DIR.11under his Digital Signature. It means it will be mandatory for all directors to haveDigital Signature under Companies Act-2013.

Effective date of Resignation:

As per section 168 (2), theresignation 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.

SECRETARIAL PRACTICE:

As discussed above E-forms tobe filed in case Resignation of Director are form DIR.11 and DIR.12.

• Filing of Form DIR.11 is the responsibility of resigning director underhis/her digital signature and
• Whereas Filing of Form DIR.12 is the responsibility of Company.

Where allthe directors of a company resign from their offices, or vacate their officesunder section 167, the promoter or, in his absence, the Central Governmentshall appoint the required number of directors who shall hold office till thedirectors are appointed by the company in general meeting.

THINGS TO BE MENTIONED IN THE E-FORM DIR 11:

• Enter the date of appointment of resigning director in the company.
• In case of an alternate director, enter the DIN of the director to whomthe appointee is alternate and click Pre-fill button. System will automaticallydisplay the name of the director to whom the appointee is alternate.
• Enter the date of filing of resignation with the company and alsoeffective date of resignation specified in the notice.
• The resignation of a director shall take effect from the date on whichthe notice is received by the company or the date, if any, specified by thedirector in the notice, whichever is later. And the same effective date isrequired to be mentioned above.
• The effective date of resignation shall be same as the date of cessationentered in eForm DIR-12 if already filed by the company.
• It is mandatory to specify the reasons for resignation from thecompany.

Attachments: The following attachments are mandatory:

• Notice ofresignation filed with the company.
• Proof of dispatch-{Attachmentsection of form DIR-11, asks for proof of dispatch. Now the question is — Isthere any requirement of formal dispatch through post which generates proof ofdispatch My Answer is NO. We can very well use scan copy of Receiving of resignation lettergiven by responsible official of the company in case of personal delivery.Further scan copy of printout of E-mail through which resignation tenderedwould be enough as proof of dispatch}.
• Acknowledgement received fromcompany, if any and is mandatory if yes selected in option at serial no 6. {Pointno. 6 in form DIR-11 inquires whether confirmation is received from the companyw.r.t. the resignation of Director. As per my understanding if we mention NOin the E-form, there will be no issue in future as confirmation of resignation from company is not mandatory u/s 168.
• When a director files eForm DIR-11 for intimating about his resignationbefore the company files eForm DIR-12, an email will be sent to the company forfiling the eForm DIR-12 and the status of the Director in the company will bechanged to Resigned against the selected designation. Once the company filesthe relevant eForm DIR-12, the status shall be changed as per the existingsystem.

We can use Board Resolution for taking note ofresignation or Resignation acceptance Letter by the Company as Evidence ofCessation. Further Resignation Letter given by the Director shall act as Noticeof Resignation filed with the Company. I sincerely believe that above articlewould be of some help for understanding.

The content of this article is intended to providea general guide to the subject matter. Specialist advice should be sought aboutyour specific circumstances.

(Author CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES is a Company Secretary inPractice from Delhi and can be contacted at csdiveshgoyal@gmail.com) Disclaimer: The entire contents of this document havebeen prepared on the basis of relevant provisions and as per the informationexisting at the time of the preparation. Though utmost efforts has made toprovide authentic information, it is suggested that to have betterunderstanding kindly cross-check the relevant sections, rules under theCompanies Act, 2013. The observations of the author are personal view and theauthors do not take responsibility of the same and this cannot be quoted beforeany authority without the written