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Resignation a Foreigner as a Director

Under sec 168(1) of Companies act 2013, a director may resign from his office by issuing a notice in writing to the company. While receiving such notice, the Board should take note of the same and the company shall inform the Registrar in such manner, within such time and in such type as may be recommended and shall also put the fact of such resignation in the report of directors placed in the immediately following general meeting of the company.

On condition that a director may also forward a copy of his resignation with detailed reasons for the resignation to the Registrar within 30 days of resignation in prescribed manner if there is any.

A director can resign after giving a written notice to the company and on receipt of the notice of resignation next step would be to inform the Registrar of companies after that company will propose all the facts and reports in the following general meeting.

Is it possible to reject the resignation of "Director" by chief managerial persons?

Under the provisions of section 168, Companies act 2013, no right has been offered to any managerial person to reject the resignation given by Directors.

What is the liability of directors during their tenure?

The Directors who has resigned shall be liable even after his resignation for the offense which took place during his tenure.

Rule 15 and 16 of the Companies Rules, 2014

According to Rule 15, the company shall inform the Registrar in Form DIR-12 and post the information on its website if any within 30 days from the date of receipt of notice of resignation from a director. Company must file DIR-12 within 30 days of receipt of notice of resignation by the director.

According to Rule 16, where a director resigns from his office, within 30 days from the date of resignation, he shall forward to the Registrar a copy of his resignation with reasons for the resignation in Form DIR-11. This should accompany with the fee as recommended in the Companies Rules, 2014 (Registration Offices and Fees). If a company has already filed Form DIR-12 with the Registrar under Rule 15, a foreign director of such company resigning from his office may approve in writing a practising chartered accountant or cost accountant or company secretary or any other resident director of the company to sign Form DIR-11 and file the same on his behalf informing the grounds for the resignation.

Effective date of Resignation of Director

Under section 168(2), Companies Act, 2017, the resignation of a director shall take effect from the date on which the "Notice is received" by the company in the notice or the date mentioned by the director which is later.

Effective date of resignation in case of non approval and non filing of DIR-12 by the company

If a Director who has submitted his resignation (for example on 31st July 2019) from the post of director to the board of directors and the board of directors neither approved the resignation nor it filed the form necessary to be filled by the company to the Registrar of companies, then according to sec 168(2), Companies act, 2013 the director who has resigned would discontinue to be a director with effect from 31st July 2019.

Resignation or Vacation of all the Directors

As per section 168(3), Companies Act 2013, where all the directors of a company resign from their offices, or leave their offices under section 167, the promoter or, in his absence, the Central Government shall appoint the necessary number of directors who shall hold office till the directors are employed by the company in general meeting.

What are the legal needs?

As par the Companies Act 2006, a private company should possess minimum 1 director and also mentions that a company must have minimum one director who is a natural person, rather than a corporate body. Besides, the constitution of the company will start the quorum for board meetings that will frequently specify that a company must have minimum one director to hold a meeting. This should always be ensured as it is common for the quorum to be organized at a higher number.

Process of Resignation

Whatever the reasons for leaving, there must be certain procedure to accomplish by both the company and the pertinent director. Preferably there will be a directors' service contract including the essential provisions, inter alia, any notice period, the agreement that the resigning director be mandatory to sell any shares held on resignation and an responsibility to resign as a director upon termination of employment.

In case of small private limited companies always there will be no director's service contract and unless specific provisions can be found in the company's Articles that need the director to give a period of notice, a director can resign at any time just by offering notice to the company. Preferably, the notice should be in writing, but this is not especially necessary under the Companies Act 2006.

In some cases a company's Articles can need the board to formally approve any director resignation but the usual method is for the leaving director just to offer written notice and leave after a set notice stage.

According to Model Articles Clause 18, an individual discontinues to be a director as soon as notification is received by the company from the director that the director is resigning from office and such resignation has taken effect along with its terms.

Forced removal

In many companies, the power to remove a director from office is offered to the board of directors or to a majority of shareholder under the Articles of Association of the company. For these companies, eliminating a director is a quite simple matter, usually needs the issue of a written notice on the director in question.

If Table A of the Companies Act 1985 is used, a director can be dismissed if he is absent without permission of the rest of the board for 6 months from board meetings held in that time and the directors so decide.

Can a director be dismissed but remain an employee?

According to law, there are two distinct roles to consider here, a director and an employee, while they generally not are separate. A director has a specific legal role whereby someone directs how a company should be operated. The role of a director is managed by the company's Articles. Frequently, directors are also employees of the company and, if so, their employment will be administered by their employment contract, called a Service Agreement. This will start out such things like hours of work, holiday, pay and termination.

Officially, the two roles are distinct and generally directors are paid a salary under their employment contract and not anything for the position of being a director. Therefore, it is technically potential to resign from the role of being a director but to carry on being employed by the company. If this is the scenario, it is important to identify clearly in your resignation letter that you are only resigning as a director but not as an employee.

Having assumed this, the company may well take the inspection that your employment contract is for you to be appointed as a director and not for any other role. You require checking what your contract mentions if you have one, as regularly it will make it clear that the director's employment is for the position of a director. The company may therefore dispute that, by resigning your directorship, you should also resign as an employee.

Each company is different and, while it may be possible to be employed in a different role, this is not always the case. If the company has other positions existing that you could perform as an employee, then they should consider this. If you have not yet resigned, it is recommended, once you have verified what your contract mentions, to talk to your fellow directors to check if they are happy with you continuing to be employed in a dissimilar role. If you have previously resigned and they have dismissed you as an employee, then you should consider getting employment law suggestion as to whether you have a claim you can make to an employment tribunal.



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