As in case of employment, an employee may resign from the company either for growth, higher salary or some personal commitment. Similarly, a director of the Company may resign when he wishes to do so.
In this article we will discuss about the compliance to be done by the Company as well as the resigning director applicable in case of resignation of a director.
Under the companies Act 2013, resignation of director is covered by section 168.
The effective date of resignation of director would be the date of receipt of notice of resignation by the company or any other date specified by the director in the notice, whichever is later.
For Example: 1) Mr A is a director of X Ltd. He prepares a letter of resignation on 15.01.2024 and the same is received by the company (X Ltd) on 20.01.2024. In such a case, effective date of resignation would be 20.01.2024.
For Example: 2) Mr A prepares a letter of resignation on 15.01.2024 and mention in the letter that his last date of working would be 30.01.2024. This letter is received by the company (X Ltd) on 20.01.2024. In such a case, effective date of resignation would be 30.01.2024 (i.e later of 20.01.2024 or 30.01.2024).
From the above we understand that there is no concept of notice period in case of director which is generally applicable in case of employees.
Beside it, in case of resignation by director, there is no mandatory requirement of accepting the resignation by the Board of the company. The Board can only take note of such resignation.
Following table provides list of compliance to be done by resigning director as well as the Company in case of resignation by a director:
| Company | Resigning Director |
| 1) To hold the Board meeting (maximum within 30 days of date of receipt of notice of resignation) to taken note of resignation of director and pass necessary resolution. {Such resolution can’t be passed by Circulation in view of requirement of section 179(3)(k) read with rule 8(2) of Companies (Meeting of Board and its power) Rule 2014} | 1) To deliver notice of resignation to the company. |
| 2) To file DIR-12 within 30 days from the date of receipt of notice of resignation. [Section 168(1) read with Rule 15 of Companies (Appointment and Qualification of Directors) Rule 2014] | 2) To file DIR-11 (optional) within 30 days from the date of resignation. It is recommended for a director to file this form DIR-11, if there are reasons to believe that company may delay/ default in filing of requisite forms with MCA/ ROC. [Section 168(1) proviso read with Rule 16 of Companies (Appointment and Qualification of Directors) Rule 2014] |
| 3) To file MGT-14 within 30 days of Board meeting held to take note of such resignation. [Sec 117(3)(g) read with Sec 179(3)(k) & Rule 8(2) of Companies (Meeting of Board and its Power) Rules 2014] | – |
| 4) To post information of such resignation in the website of the company, if any. (In case company does not have its website, it’s not required) [Rule 15 of Companies (Appointment and Qualification of Directors) Rule 2014] | |
| 5) To place the fact of such resignation in the Director’s Report to be laid in immediately following general meeting of the company [Section 168(1)] | – |
| 6) In case of listed company– Disclosure of letter of resignation along with reasons thereof to Stock exchange within 7 days from the date of such resignation.
In addition to above, in case of resignation by Independent director before expiry of his tenure, detail reason for resignation to be published in Corporate Governance Report. |
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The following are the penalty / additional fees applicable for late filing of forms in case of resignation of director:
| Default type | Penalty / additional fees |
| Company in default of compliance of section 168 | Rs 50,000 + Rs 500 each day in case of continuing default (subject to maximum Rs 3 Lacs) |
| Every officer in default of compliance of section 168 | Rs 50,000 + Rs 500 each day in case of continuing default (subject to maximum Rs 1 Lacs) |
| Late submission of DIR-12 form | Additional fees of 2 times of normal fees beyond 30 days subject to maximum 12 times of normal fees beyond 180 days [As per Companies (Registration offices and fees) Rules, 2014] |
| Late submission of MGT-14 form | Additional fees of 2 times of normal fees beyond 30 days subject to maximum 12 times of normal fees beyond 180 days [As per Companies (Registration offices and fees) Rules, 2014] |
Hence in case of resignation of director, the company should do above compliance on timely basis to avoid any penalty / additional fees.
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