A Director in a company may want to resign or the Board of Directors may want to remove the Director for several reasons. The Director of a company can also resign from the Board by filing a resignation letter with the company and also intimating the ROC with the same. Here, we will take a look at the procedure that a director needs to follow in case he wants to resign from the post of Director.
After giving notice in writing to the Company a Director may resign from a company. The Board is required to intimate the ROC of this notice within 30 days in the form of DIR-12. If the Director chooses, he can also send a copy of the resignation letter to the ROC along with the reasons for the resignation using Form DIR-11. Here is the format for the resignation letter of a Director:
Date, Month, Year
The Chairman / Secretary
Company Name Private Limited
City, State, Pin Code
Subject: Resignation from the Office of Director of the Company
I hereby tender my resignation from the office of the Director of the -------------- (Company name) with immediate effect or mention the resignation date. Notice of my resignation letter should be submitted to the Registrar of Companies and the Board of Directors should be informed in the next board meeting as conducted.
I sincerely thank all the Board of Directors for giving me this opportunity and timely assistance to discharge my duties during my tenure as a Director of the company.
I request the Board of Directors to please provide me with an acknowledgment of the resignation and a copy of the E-form DIR-12 filed with the Registrar of Companies to that effect for my reference and record.
Name of the Director.
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Resignation of a Director from the Board of Directors of a Company with resigning Directors' consent.
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Removal of a Director from the Board of Directors of a Company without resigning Directors consent.
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Removal of a Director from the Board of Directors of a Company without resigning Directors consent by serving notice.
Date, Month, Year
--------- (Name of the Director who has resigned)
Subject: Acknowledgement of Resignation
With reference to your resignation letter dated -------------. In this regard, the Board of Directors has approved your resignation w.e.f. -----------, in the Board meeting held on ---------------.
The Board of Directors has sincerely appreciated your association with the company and the support you offered during your tenure. We wish you all the best in your future endeavors.
For --------- Company,
Once the Director has resigned and the Board has accepted his resignation, the Director is not liable for any liabilities that are incurred by the company after the date of acceptance of the resignation.
However, a Director is still liable for any offenses that have occurred during his or her as the director of the Company.
A Company can remove its directors before the expiry of its term, these powers are vested with the shareholders. Here we will talk about the process of removing the Directors of a Company. In case of Non-compliance with any one of these processes can make the decision void, if appealed in a court.
This process of removing the Director cannot be initiated without providing an opportunity to the Director who is to be removed. This is one of the basic requisites on the laws ordained which provides the defendant or the defaulter an opportunity of being heard.
This process of removing Directors must be initiated by a notice. This notice should be processed by the shareholders that have a minimum voting power of 1% or someone who holds shares on which an aggregate sum of not more than Rs. 5,00,000 is paid upon the date of the notice. This is a special notice that should be signed by all the members. This special note should be delivered to the Company at least 14 days before the meeting is held at which resolution will be passed. The notice won't be valid if isn’t issued before three months of the date of the meeting.
The Director must be sent a copy of the Notice, who will be heard on the resolution at the meeting, whether the director is a member or not a member of the Company. The notice should be served at least seven days which is a week before the date of the meeting which is held.
If the shareholders are not able to deliver the notice it can be published in any two newspapers, one in English and one in the vernacular newspaper. The notice must be mandatorily posted on the company's website again this should be done seven days before the date of the meeting.
The concerned director can make a representation against this removal notice. The director can request the company to send the representation to all the members. Also, the members should be notified of the representation by a notice. In case the company is not able to all the members the director may request for reading of this representation.
An application can be made to the tribunal if the organization or any aggrieved person decides against sending out the representation to the members or reading it out in the meeting, to request to nullify the process. The tribunal can also annul the process if it finds that the Director uses this right for unnecessary publicity for defaming purposes. This director is also given the right to issue an order demanding the director to cover the cost of the application borne by the company.
A company can remove the authority to remove a Director by passing an ordinary resolution that is given to the Director. A board meeting will be conducted by giving notice 7 days before all the Directors.
The ordinary resolution that is passed is not to be filed with the registered.
Yes, a Director of a company can be removed without his consent under certain circumstances.
The Office of the Director may happen to be vacated by the statute, death, or under the provision of the AOA or the Shareholders agreement.
Even after the Director is removed by the company he is entitled to get the compensation damaged that are payable to him.
No, a Director who is removed once cannot be appointed as a director again.
Last updated: July 03, 2021