Resignation of Director | Section 168 | Companies Act 2013

Section 168 of the Companies Act 2013 provides a clear picture of director resignations, not in the 1956 Act. However, before the Companies Act of 2013, when the early Act of 1956 was in effect, court orders followed the same concept, but the new provision eliminates any uncertainty. 

A director may resign from his or her position by delivering written notice to the corporation, which the Board will acknowledge upon receipt. The date on which the notice is received by the company or the date mentioned by the director in the notice, whichever is later, is the effective date of the director’s resignation.

The resignation will take effect on the following date:

  • The most recent of these two dates shall be used as the effective date of resignation:

  • The date on which the corporation receives the notice or

  • The date is mentioned in the notice by the director.

  • The date later than the two dates above will be used as the effective date.

According to the proviso to section 168(2) of the Companies Act, 2013, a director who has resigned is nevertheless accountable for the offenses committed during his term. 

The court concluded in State of Karnataka v. Pratap Chand & Ors. that the Director is only liable when he is accountable for the company’s activities and acts committed with his agreement and connivance. 

As a result, the directors may be exempt from personal blame if they prove it. The provisions, on the other hand, have been tightened. Sanjay Rishi (American Express president), Gautham Mukkavilli (former Pepsi Co-executive), and Suresh Senapathy were among the independent directors on the board of Nirav Modi’s company (former Wipro CFO). 

Following the fraud, the majority of them chose to quit. Although independent directors are rarely held accountable since they are not involved in day-to-day operations, the (MCA) is in the process of holding them liable, assuming that they are aware of the company’s dealings.

After being identified in the CBI’s FIR, two independent directors from IDFC sent a resignation letter. They argued that because they were part-time directors, their influence in the process was restricted; however, the ex-deputy MD was detained for making loans to defunct companies. 

If the directors are proved guilty after their resignations, they may be held accountable. The resignation of Independent Directors may signal to the shareholder that there has been some mismanagement or unethical behaviour. It can impact a company’s investment, especially foreign direct investment. The board of directors is one of the factors that investors consider when deciding whether or not to invest in a company.


1. Upon receipt of the resignation letter, the company shall call a meeting of the Board of Directors or issue a Board circulation to take note of the resignation letter signed by the company’s director and to authorize the company’s CS or CFO, or any other director, to file the required form with the ROC.

2. In the case of a publicly-traded company, file a notice of such resignation to the stock market within 24 hours of the Board meeting date, and post it on the firm’s website within two working days.

3. If an independent director of a publicly-traded company resigns, make disclosures of the specific reasons for the resignation, as well as confirmation from the independent director that there are no additional material reasons. Within 7 working days of the resignation, you must notify the stock exchange.

4. Submit an intimation to the ROC within 30 days after receiving the resignation notice in Form DIR-12.  (Notice of resignation, evidence of cessation, and a copy of the Board resolution will be attached to the Form DIR-12.)

5. The director has the option of sending a copy of his resignation to ROC in Form DIR-11 along with explanatory reasons.

6. Make required entries in the register of directors and key managerial employees by section 170 of the Companies Act, 2013 and Rule 17 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

7. Include the necessary information on the website and the Board’s report.

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