Resignation of Directors Format
Table of Contents
Introduction
When it comes to corporate governance, a director’s resignation is a big deal that can affect how the business runs, its strategy, and the trust of its stakeholders.
Both directors and companies need to know the official steps for quitting. This blog will go in-depth about how to resign as a directors, including a standard format for resignation and essential things to think about.
What is the Director’s Resignation?
Resignation by a director is a formal process in which a member of the board of directors of any company chooses to relieve himself from that position.
A person may wish to do so for various reasons, ranging from personal commitments, change in career, conflict of interest, or even retirement.
Formal Resignation: Why It Matters
The importance of formal resignation is indispensable for numerous reasons. In most jurisdictions, they are also required by laws and regulations concerning corporate governance.
Transparency
Formal resignation helps maintain transparency with the stakeholders, that is, shareholders, employees, and even regulatory bodies.
Continuity
Proper documentation ensures smooth transitioning and continuity of a company by enabling it to carry on its operations without any hindrances whatsoever.
Steps Involved When Resigning
Written Notice
A written notice of resignation shall be given to the Board of Directors by the director, in which he states his intention to do so and the date from which it is intended to take effect.
Board Meeting
The board must meet to consider this resignation and discuss further action, such as convening a new director.
Record of Resignation
The resignation shall be recorded in the minutes of the Board Meeting and entered into the company records.
Authority Notification
In some jurisdictions, the Company may have obligations to the regulatory authorities concerning a change in their directorship. Public Disclosure: Disclosure must also be made to the stock exchange of publicly traded companies or through press releases.
Procedure for Resignation of a Director
Whenever a director intends to leave or quit the Company, a structured process needs to be involved to meet legal compliance.
To that end, we have drawn up below, in the exercise of powers conferred under the Companies Act 2013, the statutory requirements and manner in which resignation by a director of the Company shall become necessary.
Obligations of the Resigning Director
Submission of Resignation Letter
The director must provide a written resignation letter to the board of directors. This can be communicated via mail or delivered in person to the company’s registered address.
Filing DIR-11
Within 30 days of the acceptance of their resignation, the director must file Form DIR-11, which includes:
- The resignation letter
- A copy of the proof of dispatch
- An acknowledgment letter from the company
- Any other documents if requested
- Additionally, a fee of ₹400 is required for filing DIR-11.
Effective Date of Resignation
The effective date of the resignation can be the date mentioned in the resignation letter or the date specified in the notice. It may also coincide with the date of cessation as filed in the DIR-12 form, whichever is later.
Obligations of the Company
Board Meeting
The board of directors must convene a meeting to discuss and accept the resignation of the director.
Resolution and Minutes
Following the discussion, the board must pass a resolution accepting the resignation. It is also mandatory to draft the minutes of the meeting to document this decision.
Filing DIR-12
The company is required to file Form DIR-12 with the Registrar of Companies (RoC) within 30 days of accepting the resignation. The filing must include:
- The resignation letter
- The board resolution or acceptance letter
- The prescribed fee for filing DIR-12 is ₹300.
Disclosure Requirements
The resignation must be disclosed in the director’s report during the next annual general meeting. Furthermore, this information should be reflected on the company’s official website.
By adhering to these obligations, both the resigning director and the company can ensure a smooth transition while remaining compliant with legal requirements.
Conclusion
A director’s resignation and departure are big deals that need to be handled in a formal and polite way. Directors can ensure that their departure is handled properly by following the right steps and using a clear resignation format.
This will help the Company stay honest and running smoothly. If you are a director thinking about resigning, you should talk to a lawyer or an expert in corporate governance to ensure you do everything correctly.
Knowing your rights and responsibilities during this time can help you leave more efficiently and benefit the organization.
At Lawgical Adda, our team of seasoned professionals is committed to providing comprehensive guidance to ensure the efficient and timely completion of the director removal process.
Focus on your best work, and let Legal Adda handle the rest. Choose our services for easy winding-up, restructuring, and surrendering of documents. Contact us today!
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