What Happens When A Director Resigns From A Company?

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What Happens When A Director Resigns From A Company?

Registrationwala

A director is one of the most important executives of a company. It is normal for a company’s director to resign from a company when they’re not well, or when they find a better opportunity, or when they’re not happy with the work environment. 

But once a director resigns from the company, what happens? To know, check out this blog post titled ‘What happens when a director resigns from a company?’ In this article, we’ll also provide you with the letter format for the resignation of a director. You can use this format to resign from the post of a director.

How Does a Director Resign From a Company?

In order to step down from their position, a director must opt for resignation. To resign, they must write a resignation letter to the company. Once the board receives it, they must acknowledge it formally. In some cases, the articles of association and the memorandum of association may also necessitate the resigning director to notify the shareholders of the company.

Once the resignation of the director has been accepted, the director must serve their notice period which was mentioned in their appointment letter/contract, and agreed upon when they joined the company. 

During the time the director serves their notice period which is generally 1-3 months, the company gets enough time to search and appoint a new director. For appointing a new director, they might conduct interviews or take help of references. 

What Happens if All the Directors Resign?

Although it is rare for all the directors of a company to resign at the same time, it is still a possibility. Under section 167 of the Companies Act 2013, if all the directors of a company resign from their offices, or vacate their offices, the promoter or, in his absence, the Central Government appoints the required number of directors.

These directors hold the office till the new directors are appointed by the company during the general meeting.

Resignation of Director Letter Format

If you are a company’s director and want to file your resignation, you can use the resignation of director letter format provided below:

“(Date) 

 

To the Board of Directors 

(The Company’s Name)

(Address)

 

Subject: Resignation Letter

 

Respected Sir/Madam, I, ——————— resident of —————————————–, want to inform you that I am resigning from my position of Director at your esteemed company, due to personal and unavoidable reasons. My last working day will be (date). 

 

I’m thankful for the opportunities and growth and experience I’ve gained during my time here. I will always appreciate your guidance and support. 

 

You are requested to acknowledge the receipt of this resignation letter and arrange to submit all the necessary resignation forms and paperwork with the Registrar of Companies (RoC), to that effect.

 

Thanking You, 

Yours Faithfully

(Name of Director)

(Director Identification Number)”

Is the Director Liable for Any Offenses after Resignation?

Even after the director has stepped down from their position, they still remain liable for any offenses committed by them during their term of employment. A resignation doesn’t prevent them from any legal actions being taken against them. 

Conclusion

Many employees resign from their companies due to personal and professional reasons. A director, being an employee, may also choose to resign from their post. For this, they must follow the resignation procedure which involves filing a resignation letter with the board of directors and informing the company’s shareholders. Once the resignation has been acknowledged, the director must serve their notice period.

If you want to remove a director from your company, connect with Registrationwala for assistance.

 

Frequently Asked Questions (FAQs) about Directors

Q1. Which section of Companies Act 2013 deals with removal of directors?

A. Section 169 of the Companies Act 2013 deals with the removal of the director from a company.

Q2. Which section of Companies Act 2013 deals with resignation of a director?

A. A company director’s resignation is dealt under Section 168 of the Companies Act 2013.

Q3. Can a director join a new company without resigning from their current company?

A. No, in order to join a new company as a director, an individual must first resign from their current company.

Q4. What happens when a director doesn’t serve their notice period after resignation?

A. In such a case, the company can take a legal action against the director unless they have a genuine reason for not serving the notice period, such as critical illness. 

 

Last Update: 19-09-2024

 

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