Director Resignation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2011 Dear Sir/Madam,

Please clear my doubts in the following situation:

In case of non acceptance of resignation of a director by the BOD, can the resignation be filed using the DSC of out going director?

Pravin Gupta CS

Pravin Gupta CS (Expert)
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25 May 2011 There is nop provision regarding acceptance of resignation of director.
a director can resign from his office by giving his letter to BOD or the company and from the date day he will be deemed to ceased from directorrship.. here is no question regarding acceptance arise if he is not an MD or WTD....
>> So the company can not use DSC of outgoing director if he had already given his resignation even if the board not accept it... use the DSC of other present director for file resignation with RoC..

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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25 May 2011 The Companies Act does not have any provision governing the resignation of a Director. Section 284 of the Act provides for removal of a Director in a General Meeting, whereas Section 283 deals with vacation of office in certain specific circumstances. Nothing has been mentioned in the statute with reference to resignation of a Director or its acceptance by the Board of Directors; however a Director is merely an agent and may determine his agency.

In absence of any specific provision in the statute, the resignation of a Director should be dealt with reference to Articles of Association of the Company. Hence subject to the articles of association, resignation of a Director is effective from the date of communication of his intention to the Company or the Board of Directors of the Company.

Articles containing provision for resignation of Director

If the articles contains a provision for resignation of Director, then the said procedure has to be complied accordingly. This contention is further supported by the following case law: In Pandurang Camotim Sancoalcar v. Suresft Prabhakar Prabhu [2003] 53 CLA 265, the Bombay High court has held that since the articles of association of the company in the said case provided how it should be dealt with, the immediate effect of resignation was that the person resigning would cease to be a director, without having to wait for ‘its acceptance by the Board of directors’.

Articles not containing provision for resignation of Director

In the absence of the any provision in memorandum or articles, it is settled that the resignation of Director is effective immediately when the intention to resign is made clear to the Company.

Conclusion

In Abdul Huq v. Katpadi Industries Ltd. AIR 1960 Mad 482, 483, it was held that
“The net result of this analysis is that a director, who has submitted his resignation, will be deemed to have resigned from the date of his resignation, without prejudice, of course to his liabilities and obligation which has occurred up to that date and which he cannot evade by severing his connection with the company.”

The filing of necessary forms with the Registrar of Companies with respect to the resignation of the Director has to be done by the Company as required under Section 303(2).

Question of using DSC of retiring director is irrelevant. DSC is used for verification part. How can a person retiring from Directorship verify form 32 by his DSC. His DSC will have no authority from the date of resignation itself.

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