Section 168 Companies Act: Resignation of director

Section 168 of Companies Act: Resignation of director

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

1. 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 in such manner, within such time and in such form as may be prescribed and shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company:

Provided that: a director shall also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar within thirty days of resignation in such manner as may be prescribed.

2. 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:

Provided that: the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.

3. Where all the directors of a company resign from their offices, or vacate their offices under section 167, the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in general meeting.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 168

Section 168 regulates the statutory resignation of directors, the effective date of resignation, dual filing requirements (Forms DIR-11 and DIR-12), and continuing liability for pre-resignation acts.

Statutory Powers & Jurisdiction: Section 168 empowers a director to resign from his office by giving a notice in writing to the company.
The Board: The Board must take note of the resignation and inform the ROC within thirty days in Form DIR-12, while the resigning director may also forward a copy of his resignation with reasons to the ROC in Form DIR-11.
Sub-Section (2) Provision: Sub-section (2) provides that the resignation takes effect from the date on which the notice is received by the company or the date specified in the notice, whichever is later.

Crucially, sub-section (2) proviso contains an express statutory reservation: the resigning director remains liable even after his resignation for the offenses which occurred during his tenure as director.

Key Landmark Precedents:

Sunil Bharti Mittal v. CBI (2015) 4 SCC 609: The Supreme Court recognized that a director's liability is determined by his active role during the period when offenses were committed, and resignation does not wipe out liability for past corporate actions.
Saumil Dilip Mehta v. State of Maharashtra (2002) 111 Comp Cas 533 (Bom): The High Court held that a director who has submitted his resignation is relieved from all future statutory duties and liabilities of the company from the effective date of resignation, regardless of whether the company files the necessary return with the ROC.

Legal Commentary:

Section 168 clarifies the long-standing controversy regarding whether a director's resignation takes effect upon delivery to the company or upon ROC registration. Under Section 168(2), resignation takes effect immediately upon receipt by the company. However, the statutory reservation under the proviso means that resignation is not an exit ticket from pending financial irregularities, cheque bounces under Section 138 of the NI Act, or tax evasion committed during the director's tenure.

Section 168: Resignation of director

Section 168 of Companies Act: Resignation of director

Legal Commentary & Landmark Judgments: Section 168