Precautions To Take While Resigning As A Director.

A director can apply for his resignation by applying with a proper reason along with other legal documents and board resolution required with the filing of the prescribed forms to the ROC.

Precautions to take before applying for the resignation

By agreeing to become a director of a corporation, a person automatically accepts the duties and responsibilities related to that position. A director is looked upon as the officer in charge, as he’s the one who runs the company. If the director wishes to resign, then he must file for his resignations with the following precautions

  1. The director must be aware of all the business activities carried under his nose and should be responsible enough to comply with his duties during his tenure
  2. He cannot resign without giving a solid reason for his resignation or at an inappropriate time. His resignation can either be accepted or rejected by the board
  3. Even after resigning, he would be liable to all the business or any fraudulent activities held during his tenure.
  4. He should seek opinions from the board member or any other person he feels relevant before applying for resignation.
  5. In practice, a resigning director may well have accrued some culpability for the issues that eventually led to the resignation

What are the precautions taken while applying for the resignation?

 

Step -1: Applying for a resignation

Under Sec 168, of companies act a director may apply for his resignation by giving a notice in writing addressed to the Board of the Company stating proper and valid reasons for the same.

Step - 2: Intimate the registrar

Once the board receives the application, they will intimate the registrar about the resignation with 30 days. They also need to share it in the report of the director in the next general meeting.

Note: A director can also apply directly to the registrar by filing form DIR-11 with prescribed fees within 30 days.

Step - 3: Date of resignation

The director needs to keep track of the date of his resignation which may be the date when his resignation letter was received by the board or the date he mentioned in his letter. In such cases whichever is later is considered as the effective date.

Step - 4: Mode of sending the letter

The director needs to keep track of his resignation letter. Whether he sends it through speed post, courier, email or even hands it directly, he needs to make sure the letter is sent to the registered office only.

Step - 5: Filing form MBP-1

The resigning director can give MBP-1 within 30 days to intimate the Company of his concerns and interests by Section 184. It is not a mandatory procedure, but it can help the director acting as non-compliance on his part.

Step - 6: Filing of form DIR-11

Form DIR-11 is an optional form, but it should be filed in cases

  • Where the resigning Director has an apprehension that the Company would not file e-form DIR-12.
  • Where the resigning Director has an apprehension that his Digital Signature (DSC) might be used fraudulently for filing any return of the Company with the ROC in order to de-link the DSC of the resigning director from the Company.
  • When the period of 30 days as stipulated has expired.
  • Where there was only 1 Director left on the Board of the Company, and he also wants to resign, then he should file e-form DIR-11 because there is no other Director in the Company and he cannot affix DSC in e-form DIR-12 for his resignation.

Step - 7: Documents to be preserved post-resignation

It is advisable for the director to pay the fee at the MCA portal and

  • Keep a copy of e-form DIR-12 filed by the Company
  • A copy of his Resignation Letter.
  • Proof of service of Resignation Letter to the Company
  • Reciept of Speed post/email copy / Original receiving, whichever mode was used.
  • Copy of any communication received from the Company.
  • Copy of AOA of the Company, with specific reference to the clause governing the resignation by a Director.
  • Copy of e-form DIR-11 filed with ROC if any.

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