Dear Dinesh,
Interestingly, there is no provision under the Companies Act, 1956 relating to the resignation of a director from his/her office. Thus, we need to examine the articles of association of a company or the terms of appointment to determine when and how a director can resign from his/her position as a director of a company.
Under section 303 of the Act, a company is required to maintain a Register of Directors, which should contain the prescribed details, and when there is any change in the position of directors (appointment, resignation or removal), it is required to file a return with the Registrar of Companies (ROC) in e-Form 32, giving the necessary details of the change within 30 days thereof. (But, it is not your duty to file Form no. 32. It is the duty of remaining directors.)
In the case of T. Murari vs. State [1976] 46 Com. Cases 613 (Mad.), it was held that, in the absence of a provision in the articles of association of a company, the resignation tendered by a director unequivocally in writing will take effect from the time when the resignation is tendered. (Thus, in this case, no consent from the Board of directors or ROC is required). Further, a voluntary resignation, permitted by the articles of a company, isn’t dependent on its acceptance by the company, unless provided otherwise - Fateh Chand Kad vs. Hindsons (Patiala) Ltd. [1957] 27 Com. Cases 340. A resignation indicated orally at a general meeting and duly accepted thereat, was held to be effective in Latchford Premier Cinema Ltd. vs. Ennion [1932] 2 Com. Cases 106. However, a verbal resignation would not be effective in the light of such an article, if made to, and accepted by the Board of Directors, since the Board would have no authority to accept, and the resigning director would be unable to end his contract with the company, except in accordance with its terms, express or implied, or with the company’s agreement.
Thus, the acceptance of resignation to end the tenure of office of a director would be mandatory only in cases where it is stated either expressly in the Articles of Association of the Company or in the terms of appointment. In the absence of the above stipulations, the resignation of a director, once submitted to the company, would take effect immediately.
Regards,
Veeral Gandhi
CAclubindia
