Resignation of a Director from the Board of Directors of a Company with resigning Directors’ consent.
Removal of a Director from the Board of Directors of a Company without resigning Directors consent.
A Director in a Company may want to resign or the Board of Directors may want to remove a Director for a number of reasons. A company director can also resign from the Board by completing a letter of resignation from the company and notifying the ROC accordingly. Here, we will look at the process a director should follow in case he wants to resign instead of being a Director.
Director's notice of resignation from the company
After giving notice in writing to the Company the Director may resign from the company. The Board is required to notify the ROC of this notice within 30 days in the manner of DIR-12. If the Director chooses, he or she may also send a copy of the ROC’s letter of resignation and the reasons for the resignation using Form DIR-11. Here is the director’s letter of resignation format:
Responsibility on the part of the Director who resigns
A director can resign from his office by sending written notice to the company’s Board of Directors. Email or letter to the company is also a valid means of communication.
A copy of the cancellation may be sent along with a detailed reason for the cancellation to the Registrar of Companies in Form DIR11 and the prescribed fees in the Companies Act, 2014 within 30 days from the date of cancellation.
* Effective date of cancellation: Will take effect from the date on which the company received the notice of resignation or the date on which the director specified it. The first day of resignation will be the same as the date of resignation filed on the DIR12 form.
With DIR-11 the Director is also required to attach the following documents:
- Notice of cancellation submitted to the Company (letter of resignation may also be attached)
- Proof of Publishing.
- If any approval is received from the Company and is binding the Director has chosen Yes on Form DIR11.
- Some information may be provided as an optional attachment.
The Board of Directors will consider the notice of resignation received and accordingly the decision should be approved by the Board of Directors for acceptance of the resignation and is required to record the minutes of the meeting of the Board of Directors.
The Registrar must be notified of Form DIR12 (Regulations 15 of Companies, 2014) The Board of Directors must be notified within 30 days from the date of receipt of the cancellation.
The Board of Directors must announce the resignation of the Director of the annual general meeting and must appear on the Company’s website.
The company is required to attach the following documents while submitting DIR1:
- Cancellation Notice (Compulsory)
- Proof of completion (Decision of the board or letter of acceptance can be attached)
Director’s responsibility after cancellation
Once the Director has resigned and the Board has accepted his or her resignation, the Director is not liable for any liabilities incurred by the company after the date of receipt of the resignation.
However, the Director is still responsible for any lawsuits that may arise during his tenure as director of the Company.
Director Release Process
A company may remove its directors before the expiry of its term, this power is vested in the shareholders. Here we will talk about the process of removing Company Directors. In the event of non-compliance, any of these procedures may invalidate the decision, if it has been referred to a court of law.
Step: 1 Basic Requirement
This process of removing a Director will not be started without giving the Director an opportunity to be removed. This is one of the basic requirements of statutory law that gives the defendant or the offender an opportunity to be heard.
Step: 2 Releases Notification
This process of removing directors must begin with notice. This notice should be considered by shareholders with a limited voting capacity of 1% or other shareholders when the total amount does not exceed Rs. 5,00,000 is payable on the date of notification. This is a special notice that must be signed by all members. This special document must be submitted to the Company at least 14 days before a meeting to be approved. The notice will not be valid if it is not issued within three months of the date of the meeting.
Step: 3 Notice to Members
The Director must be sent a copy of the Notice, which will be heard by a decision of the meeting, whether the Director is a member or not a member of the Company. The notice must be given at least seven days a week before the date of the meeting.
If the shareholders are unable to submit the notice it may be published in any two newspapers, one in English and one in the indigenous languages newspaper. The notice must be posted on the company website and this must be done seven days before the date of the meeting.
Step: 4 Introduction in writing
The Director concerned may make a representation against this notice of removal. The director may request the company to send submissions to all members. Also, members should be notified by representation by notice. In the event that the company is unable to reach all members, the director may request that this proposal be read.
Step: 5 File a complaint with the Tribunal
An application may be made to the Tribunal if the association or any complainant decides not to send representations to members or read them at a meeting, to request the repeal of the proceedings. The court may also revoke the proceedings if it finds that the Director is exercising this right to make public disclosure for the purpose of degrading purposes. The director is also entitled to issue an order requiring the director to pay the costs of the application borne by the company.
Frequently Asked Questions
The Company may revoke the authority to remove the Director by approving the general decision provided by the Director. A board meeting will be held with 7 days’ notice in advance of all directors.
A standard approved resolution should not be applied to registrants.
Yes, a Company Director may be removed without his or her consent under certain circumstances.
The Directorate may be dissolved by law, by death, or under the provision of AOA or a shareholders’ agreement.
Even after the Director has been fired by the company he is entitled to receive damages that are to be paid.