Compiled by Gyanendu & Muskan
Our article on Director’s Resignation is one of our most popular blogs, probably because it is a small write-up that clearly states the fundamentals revolving around the subject of Director’s resignation. We have been receiving numerous queries over past many years and many of the questions revolved around compliances, liabilities and consequences. The queries were researched, discussed and diligently replied by our team at B. Samrish & Co. and it can be viewed below our blog on Director’s Resignation under Companies Act, 2013. We felt the need to republish some of the selected queries separately which we thought would be interesting for the readers. While doing so, we included some questions which were raised time and again, probably because there were no direct answers. We collated these queries, organised them and further refined for ease of understanding. These have been reproduced here in the format of FAQs.
Familiarity with form DIN (Directors Identification No.), DIR 11, DIR 12 and DIR-3 KYC would be helpful. Resignation related forms are DIR 11 and DIR 12. Form DIR 11 is the liability of the Director, and Form DIR 12 is the liability of the Company. DIR-3 KYC is KYC form for Director. Every individual who holds a DIN is mandatorily required to file DIR-3 KYC. The filing of Form DIR-3 KYC is Director-specific annual compliance,
Here are the questions and some related aspects around them.
1. I am a director of a company and wish to resign but unable to file DIR-11 as my DIN has been deactivated. I have not filed my DIR 3 KYC. How can I resign? What are my options?
Please be apprised that pursuant to Rule 12A of the Companies (Appointment and Qualifications of Directors) Rules, 2014, every individual who holds a DIN as on 31st March of a financial year, is mandatorily required to file DIR-3 KYC on or before 30th September of immediate next financial year. The filing of Form DIR-3 KYC is Director-specific annual compliance, therefore it needs to be filed by every individual who is having DIN irrespective of his/her association with any of the companies as a Director. In case of filing of Form DIR-3 KYC after the due date, an individual shall have to pay the applicable additional fees of INR 5000/-.
Further, under the provision of Section 168 (1) of the Companies Act, 2013 read with Rule 15 of the Companies (Appointment and Qualification of Directors) Rules 2014, where a director resigns from his office, he may within a period of thirty days from the date of resignation, forward to the Registrar a copy of his resignation along with reasons for the resignation in e-Form DIR-11 along with the fee. It is pertinent to note that one should hold a valid DIN with “Approved” status to file any form with the Ministry.
Thus, in your case, you can intimate the Ministry about your resignation from the Company via the filing of Form DIR-11 after activating your DIN.
2. A director filed DIR-11 pending the filing of DIR-12 by the company on account of a dispute. However, he filed the form with wrong details of his date of appointment and his status. How to rectify the situation so that the mention of his resignation appears in the MCA database?
Pursuant to the provisions of Section 168 of the Companies Act, 2013, where a director intends to resign from the office of a director, he shall send a notice to the company and may file e form DIR-11 with the ROC within 30 days from the date of tendering his resignation. The Company shall within 30 days of receipt of notice of resignation file the Form DIR 12 with the Ministry.
Therefore, Form DIR 11 is the liability of the Director, and Form DIR 12 is the liability of the Company. Incorrect details filed with the Ministry in DIR 11 cannot be rectified. However, the Company must ensure that the details mentioned while filing DIR 12 are correct.
3. I want to resign as a director of a company. The present status of the company is inactive. So, will there be any problem with filling DIR 11 for inactive status?
We need to identify first the reason for the inactive status of the company to determine whether there is any problem with the filing of e-form DIR-11; for example:
If the Company Status (for filing) on MCA is “Not available for e-filing” then the DIR-11 couldn’t be filed, and
If the Company’s present filing status (defaulting in filing its statutory returns for the last two years) is “Inactive” then form DIR-11 can be filed.
4. I need to file DIR-11 but as my director is disqualified his DIN is deactivated and hence cannot file DIR-11. What to do in this case?
Since the Director is disqualified, his office as Director is automatically vacated in all the companies where he is Director pursuant to Section 167 of the Companies Act, 2013. Thus, the filing of DIR-11 is not required.
5. One of the directors after being the Director in the Company shifted to Canada and there was no communication via email or phone, and the Indian registered address is vacated and leased to others. The company tried to figure out the contact details but failed to do so. In this case, can we file DIR-12 under section 167(1)(b), if yes what are the subsequent documents to be attached other than normal documents?
Pursuant to the provisions of Section 167(1)(b) of the Companies Act, 2013, the office of the director shall become vacant in case if he absents himself from all the board meetings held during a period of twelve months with or without seeking a leave of absence.
Further, such change in the office of the Director is required to be intimated to the Registrar under the provision of section 170 read with rule 18 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 via the filing of Form DIR-12. A copy of board resolution approving such vacation, copy of attendance register, copy of minutes of the board meetings, and all the correspondences which the company made to get in touch with the Director may be attached to the Form as evidence of cessation.
Also, the provisions of the minimum composition of the BOD need to be taken care of for conducting the Board meeting of the Company.
6. In a Private company, there are 4 directors i.e. A, B, C & D., and 2 members namely A & E (A is a director as well as a member of the company) both members are holding 50-50% of the share. The company wants to remove the directors A & B but both the directors are not ready to resign. Proof of notice sent is not available. What options are available?
The company has the authority to remove a Director by passing an Ordinary Resolution, given the Director was not appointed by the Central Government or the Tribunal. Thus, obtaining shareholders’ approval is a pre-requisite for the removal of director by the Board.
As per Section 167 of the Companies Act, 2013 if a Director does not attend a Board Meeting for 12 months, starting from the day on which he was absent at the first board meeting even after giving due notice for all the meetings, it will be deemed that he has vacated the office and a Form DIR – 12 will be filed on his name and his name will be removed from the Ministry of Corporate Affairs.
7. In a private limited there are 3 directors out of whom 1 director is not able to take part in the activities of the company as he is on bed rest. So the board of directors has decided to resign (remove) him. Also, his DSC has expired and his DIR-3 E KYC has not been filed. What should the Board of Directors do to resign him from the company without giving him further pain?
Resignation is a voluntary action. Board may only take steps to remove him. The board may follow the procedure of removal of a director under Section 169. It is suggested to obtain the services of a professional in this matter.
8. We have a private company with 2 directors each having 50% shares. I am a resident Indian and the other director is an NRI. Now the other director is not contributing any business revenues and since he is abroad he is not involved in any day-to-day operations or any business decision. How can I remove the Director.? Also, can I start a new company and do business in that without informing him and resigning from the existing company?
(a) Removal of Director:- As per Section 169 of Companies Act, 2013 Company can remove a director in the General Meeting through Ordinary Resolution before the expiry of the period of his office after giving him a reasonable opportunity of being heard and a new director to be appointed in place of the removed director. Besides this Articles of association can also outline several circumstances under which a director can be removed or deemed to be removed.
(b) Start a new Company:- Once you set up a new company and become the director in that company then as per section 184 you need to disclose the change in interest at the board meeting of all the Co.’s where you are on the board, it will reflect on MCA that person having this DIN is a director in these many co.’s. If you intend to just be a promoter/shareholder in the new company then there will be no issue.
9. A Pvt Ltd. Company in which there is 2 director, one of them died in the year 2016 but till today company did not file any form related to death as well as a new appointment. What steps should be taken?
As per Rule 18 of Co’s (Appointment & Qualification of Directors) Rules, 2014, In case of any appointment/change in director, the company needs to intimate ROC by filing form DIR-12 along with the prescribed fee within 30 days of appointment/change. The company has the option to file the said Form with ROC with payment of an additional applicable filing fee.
10. We have filled DIR 11 to resign from a company in protest of wrongdoings in the company. Now Company is not filling our DIR 12. Is there any other way of filling DIR 12, So that our name is removed from the MCA database?
Your liability comes to an end on the date of resignation from the Company, i.e., from the date mentioned in DIR-11. Generally, the date mentioned in the resignation letter is the effective date of resignation. Please make sure that if there is any such condition that your resignation will not be valid unless accepted by the Board, then the Board must have accepted your resignation letter, for it to be effective. Such a condition may arise by way of Articles of Association, Employment Agreement, etc.
Further, it is the Company’s liability to file DIR-12. You are nowhere liable.
11. There were 5 directors in a Producer Company. Subsequently, 3 directors submitted their resignation letters. The company also appointed 3 new directors in their place but was unable to submit DIR 12 for removal of directors due to non-KYC. Further, the directors are not responding for DIR KYC due to a dispute. What is the best way to remove the directors?
The provisions of the producer Company are governed as per Sec 465 of the Companies Act, 2013; minimum 5 and maximum 15 directors. In the present case, the Company seems to have on ROC record 8 present Directors since the resignation of Directors will not be updated until the filling of DIR-12. Due to the non-filling of DIR-3KYC, the DIN status is de-activated; hence, we cannot file DIR-12 either. Our suggestion would be to have a word with the Directors and intimate them that since the Directors have not filed DIR-11, they can still be treated as ‘Officer in Default’ in case of any violation by the Company. In case this does not work out, then you can apply with the ROC pleading the present case and request for re-activation of their DIN to fill DIR-12.
12. In a Public Ltd Company (Limited by guarantee) if an elected Director resigns, can he be re-appointed after a period of 2 months? If yes, will he have equal powers again, and if not, then can any other director who had passed the resolutions with next higher numbers, be taken on board?
There is no restriction under the Companies Act, 2013 for the appointment of the director who earlier resigned from the Company. It shall be governed by the Article of Association of the Company. Further, the power of the Director shall also be governed by the Articles of the Company and the terms of appointment by the members.
13. The company is not accepting my resignation as Director. What shall I do?
As per sec 168(1) of Companies Act, 2013 read with rule 15 and 16 of Companies (Appointment and Qualification of Directors) Rules, 2014, a Director may resign from his office by giving a notice in writing to the company and may also forward a copy of the acknowledged resignation letter along with reasons to the Registrar within 30 days from the date of resignation in form DIR 11. Further, the company shall intimate the Registrar about such resignation in Form DIR-12 within thirty days of receipt of notice of resignation from a director.
From the above provisions, it can be inferred that the resignation of the director is not subject to acceptance by the Company. In the instant case, it is advisable to file form DIR-11 for the resignation.
14. I am a full-time director and shareholder (16% share) in a private limited company. I am resigning from the directorship of the company. What are the monetary benefits I can ask from the company when I am asked to resign from the directorship of the company?
The Company and the director shall comply with the manner in which a director shall resign under the Companies Act, 2013. The Act however does not provide for any advance payment for a resigning director. The benefits or advance salary etc. shall be based on terms of employment on which a director is appointed.
15. One Director of a Private Limited Company (having 02 directors only) resigns on 15 April and files DIR-11. The company has not appointed any new director yet. Is it possible to resign without the appointment of a new director? Also, is the director who had resigned on 15th April liable to sign the returns along with the other director for FY ending March 31?
One of the requirements of a private company is to have a minimum of 2 directors on their board. Also as per section 134 of the act, financial statements of a private company need to be signed by at least 2 directors. Now since in the given case, 1 director has resigned, it is the duty of the remaining director to appoint another director. So it is advisable to fill the vacancy first and then go ahead with the filing.
Further, it should be noted that a director who has resigned is liable for acts done during his tenure. Also, request you to go through the following article:
16. I am one of the promoter directors and shareholder (14%) in a Company, and working full time in the company. Now I want to resign from my full-time working profile. Do I need to leave/forgo my share in the Company? If the company appoints a new director will the shares of the resigning director be transferred to the new director?
At the time of resignation, you are not required to forgo your shares, being a director of a company and a shareholder of a company are two different concepts. If you resign from the directorship, you still can remain the shareholder of the company.
17. Whether oral resignation u/s 168 is valid or can the director resign by oral means?
Section 168 clearly states that the director may resign by giving a notice in writing. Therefore, oral resignation is not a valid means of resignation by a director of the Company.
18. Whether resignation can be done in a general meeting? Extracts of AGM can be filed in form DIR-12?
There is no restriction on taking note of the resignation of the director in the general meeting. However, if the terms of appointment of the director provide that resignation of director requires approval of the Board of Directors of the company, then it can be done through board meeting or RBC only.
19. Can we appoint a Director followed by accepting the resignation of one of the existing directors in the same board meeting? Will the resigning and appointee director attend the board meeting?
It is valid to appoint a director in a meeting and accept the resignation of the other director in the same meeting. You are required to do it in sequential order i.e. firstly appointment of the director and then resignation of the other director.The Director resigning from the Board may attend the Board Meeting, but the director who is appointed cannot be present in the meeting as he is not a member of the Board.
20. How can I remove my name against the director of a company which has been striked-off? Without my resignation, the company was dissolved. Does this mean I still need to fill a form to resign as a Director from the company?
Pursuant to the provisions of Sec 250 of the Companies Act, 2013 when a company is struck off, it ceases to operate as a company, and the Certificate of Incorporation issued to it is deemed to be canceled. There is no mechanism of removing the name as a director of the company which is not in existence. Further, as per Sec 248(7) the liability, if any, of a director shall continue to exist.
You may also like to read:
How can a private Company remove a director who is a foreign national whose DIN has been deactivated. it is difficult to to get him to procure dsc and also to file DIR 3 KYC. He has not attended board or general meetings for past 2 to 3 years. The Company has not maintained copies of service of notice of board and general meetings. Will it be possible to file form DIR 12 either for vacation u/s 167, or resignation u/s 168 or removal u/s 169.
Dear Reader,
Your case needs detailed analysis. You may connect with us with complete details for professional assistance in this matter.
We have formed a company with 4 directors with equal Share and one of Non-performing Director wants to resign from the company to join a similar interest business in another company. Also the resigned director is ready to sell off his shares to us but one of the other semi-performing Director is holding him not to sell his resigned directors shares.
What options do we have so that resigned directors’ shares can be acquired by us to get maximum hold on the company?
Dear Reader,
We understand that you intend to acquire shares of the director who has resigned. Please note that you cannot force the individual to sell the shares to you. If you require our professional assistance in managing this operational aspect of the company, feel free to connect with us at [email protected].
Can an additional director resign before AGM & can apply for re-appointment as additional director later in same year or next year?
Dear Reader,
As per Section 161 of Companies Act 2013, the board of Directors of the Company are empowered to appoint additional directors where the articles of the company permit to do so. The additional director holds office only up to the date of the annual general meeting. If for some reason, the meeting cannot be held within the prescribed timelines, his term ends on the last date on which annual general meeting should have been held.
Please note there is no difference between a person who has been appointed as additional director by the board and one whose appointment carries the approval of the shareholders. He has as much authority as any other director has and therefore the resignation of such director shall be governed in the same manner as of any other director, wherein pursuant to Section 168 a director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar.
Based on the facts stated by you it can be inferred that an additional director may resign before AGM and can apply for re-appointment as additional director later in same year or next year as there is no provisions restricting the appointment of the director who earlier resigned from the Company. It shall be governed by the Article of Association of the Company.
Hi, is it possible to remove an executive director from Indian company if he is not having a DIN and lives abroad and not in a connection with the company?
Dear Reader,
Please note that Section 152(3) of the Companies Act, 2013 (“the Act”) provides that “No person shall be appointed as Director unless he has been allotted Director Identification Number (‘DIN’).”
Further, Section 164 of the Act, which specifies the grounds for disqualification of director, includes non-procurement of DIN before appointment as one of the grounds for disqualification. In case a person has been appointed without obtaining DIN, he shall be liable to vacate his office {Refer Section 167(1)(a) of the Act}.
From the facts shared by you, we understand that the concerned person has been appointed without obtaining DIN, thus, he shall be liable to vacate his office and need not be removed.
For assistance in this regard, you may connect with us to seek professional advice in this matter.
Hi, i just wanna that i am the second director in a company and i am not share holder, even my name is not in MOA/AOA because i added later after resignation of previous one, but in march 2022 first director was died and further ROC and Income tax compliance not done for FY 2021-22 to till today, so can i resign with filling DIR 11 or not and what will happened if i not file anything, is my DIN got effected causes this? kindly suggest me what should i do?
Dear Reader,
As per Section 168 of the Companies Act, 2013, the Director intending to resign shall give notice in writing to the Company. Your case requires professional assistance and hence, you are requested to seek guidance from any local professional.
If in a company there are 4 director out of which two directors(with DIN Deactivated) are outside the country and one director has died therefore company has only one director, now we want to close the company, how can we do so?
Dear Reader,
In the instant case firstly you have to activate the DIN of both directors for further compliance for the closure of the company. After activating DIN of directors one can proceed with closure of the Company.
It can be done in two ways either by Striking off the name of the Company or by voluntary liquidation. Since the facts of the case are not clearly cited, we need some more details to guide you further in this regard. You may connect us to seek professional advice in this matter.
Dear Author
Our company of the NED & ID Director resigned (Sec-168) after the board meeting date, Company MD accepted his resignation letter, now are filing Form DIR-12 the PCS was objected for not attaching the BR, but company planning to conduct meeting next two month.
Q- If without BR can’t file form DIR-12 ….?
Q- Resigned Director filed form DIR-11 and Ack. to the Company shall we file DIR-12 without BR?
please comment on this…..
thanking you
Dear Reader,
It is recommended to file Form DIR-12 within the prescribed timelines stipulated under the Act. You need not wait for any Board Meeting to take note of the resignation. A document evidencing the resignation needs to be attached to the Form, which can be even the resignation letter of the resigning director accepted by any of the directors.
Further, it may please be noted that resignation of a director is not subject to acceptance by the board and hence Board resolution for filing this Form DIR-12 is not required.
In case you have further queries, you may contact us for professional assistance.
We have 3 directors in a Company amongst them 2 have resigned by giving Notice and filed DIR 11 but the Company has not accepted the resignation due to internal dispute. Also, AOA doesn’t specify anything regarding Resignation of Directors. Is the resignation Valid? Is the Company Mandated to file DIR 12? Should the Company appoint new director to bring the No. of directors to statutory limit of 2 ?
Dear Reader,
Please note that as per Section 168 of the Companies Act, 2013, the resignation by a Director is not subject to acceptance by the Board. The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later.
The law has caste duty upon the Company to intimate the Registrar about the said resignation by way of filing form DIR-12.
Further, As per Section 174, if at any time the number of directors fall below the minimum required then the director has 2 options:
A) Convene a Board Meeting and appoint the number of additional directors required to achieve the minimum number of directors; or
B) Convene a General Meeting and appoint the directors.
For further information, please refer All Directors resigned; what to do?
I resigned from company in ROC and on same date another director appointed in that pvt.Ltd company. Board has accepted my resignation. I was only a granter in Bank for getting Working capital. The company went on defaulter after 5 months of my resignation. Am i liable for bank loan. Board has also intimated about my resignation .
Dear Reader,
Please note that if a director had made himself as a party of a contract of guarantee for debts of his company during his directorship and after his resignation he had failed to secure release letter from the bank of the company from guarantee given , then in this case the guarantee survives and he becomes liable in case of default after his departure.
Regarding FAQ 15- It is mentioned that as per Section 134, the financials are required to be signed by at least 2 directors, whereas Section 134 states that it would be sufficient If Chairperson of the Company signs the financials where he is authorised to do so. So, is it required to get the financials signed by Chairperson and one more director?
Dear Reader,
Pursuant to Section 134(1) of the Companies Act, 2013, the financial statements of a company shall be signed by the Chairperson (where he is authorized) or by two directors (one of which should be MD, if any) and CEO, CFO and the Company secretary (CS) {wherever they are appointed}.
From the aforesaid provision, we can infer that either the Chairperson or two directors shall sign the financial statements (in addition to CEO, CFO and CS).
Thus, where the Chairperson has been specifically authorized to sign financial statements, it is not required to get it signed by one more director (assuming the company does not have CEO, CFO and CS).
One of my cousin have submitted his resignation during 2013 along with DIR 11. But, the company faced several issues like repayment of deposits during 2016 . But unfortunately his name was being dragged in unnecessary issues and he has been penalised . Since he does not know what happened after 2013 i.e. 2014-15, 2015-2016 and a gap of three years the company have called him and informed that till his name not being removed in ROC. Is there any possibility to prove it ? He is having all details like resignation sent thru email and also he handed over the letter of resignation to all directors in person. Also his PF amount being stopped and also no salary he earned after his resignation. Kindly clarify. Rgds
While Glancing through your queries, we don’t think this would be a right forum to analyse and answer them here.
However, please note that director’s resignation is not subject to acceptance unless he is a MD or a WTD. We request you to seek professional advise from a Practicing Company Secretary or a Lawyer in your area. Documentary evidences shall be crucial