UNIVERSITY OF PETROLEUM & ENERGY STUDIES

SCHOOL OF LAW

LL.B. (3 YEAR) PROGRAM

SEMESTER-II

BATCH: 2021-24

TOPIC: DIRECTORS OF A COMPANY

SUBMITTED BY:

DIPANKAR VERMA; (SAP ID: 500094402)

SIMRAN ANDRADE; (500093521)

SMRITI SINGH; (SAP ID: 500093523)

DEVANSH PUNDIR; (500098167)

SUBMITTED TO:

PROF. MONICA PRADYOT

1
 TABLE OF CONTENT

SR TOPIC PAGE NO BY
NO.
1 Introduction 03
2 Types of Directors in a Company 04-06 Dipankar Verma
3 Power of Directors 07-10 Simran Andrade
4 Duties and Liabilities of a Director 11-16 Smriti Singh
5 Resignation and Removal of Directors 17-20 Devansh Pundir
6 Conclusion 21

2
INTRODUCTION

A company is a legal entity with no physical presence. To administer its business, it can only act through natural
persons. The individual who acts on its behalf is known as the Director. A Director is any person who holds the
job of Director under any name. They are businessmen who have been recruited by the corporation to run its
affairs. They are not, however, the company's servants. They are, in fact, the company's officers.

A director is a person appointed to direct and supervise the affairs of a company. The work of the company is
assigned to the directors. The company's board of directors is collectively known as the board of directors,
which exercise the ultimate executive power to control the management and affairs of a company. In fact, the
board of directors is the one who looks after the management and protects the interests of all the stakeholders of
the company.

Director check with a part of the collective body called the Board of Directors, this is chargeable for controlling,
dealing with and directing the affairs of an employer. Directors are taken into consideration the trustees of the
enterprise’s belongings and money, and additionally they act as the agents in transactions which might be
entered into via them on behalf of the company.

Basically, the board of directors is a group of trustworthy and respectable people, they take care of the interests
of the large number of shareholders, who are not directly involved in the management of the company. They
have a responsibility to act in the best interests of the company. The Companies Act 2013 does not have a
detailed definition of the term director”. Section 2 (34) of the Act provides that “director” means a director
appointed to the board of directors of a corporation. A director is a person appointed as a company director
under the provisions of the Companies Act 2013. A director is sometimes described as a trustee, agent and
sometimes a managing partner. Directors are viewed differently depending on the circumstances.

According to the provisions of the Law on Companies 2013, it is mandatory for each company to have at least
3 directors for public limited companies, at least 2 directors for limited companies and 1 director for public
companies. - HR company. At most, a company can have 15 directors. In case the company wants to appoint
more directors, it can do so by passing a special resolution at the general meeting of shareholders (GM).

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TYPES OF DIRECTORS

Directors are predicted to perform their responsibilities and obligations as rationally diligent people with talent,
expertise, and experience as the individual wearing out capabilities of a director and of that himself.

Directors are answerable for controlling, dealing with and directing the affairs of a business enterprise. He\She
plays more than one role in the organization. Hence, a director performs numerous roles in a business enterprise,
as an agent, as a worker, as an officer and as a trustee of the company.

The regulation calls for that every corporation should have at the least 3 directors in the case of public
constrained groups, minimal 2 administrators in the case of personal restrained corporations and a minimal 1
director inside the case of one-individual organizations. An employer may have a most of 15 directors. The
corporation should appoint extra directors bypassing the unique resolution in its standard assembly.

RESIDENTIAL DIRECTOR

As per the law, every company needs to appoint a director who has been in India and stayed for not less than
182 days in a previous calendar year. Provisions of Section 149(3) of the Companies Act, 2013 deals with the
residence of a director. The new Companies Act introduced this concept of Resident Director. The Act makes
the residence of a Director in India mandatory. Declaration of a Resident Director is not required. A Resident
Director is like any other Director and he is required to attend at least 1 Board Meeting in a year.

INDEPENDENT DIRECTOR

Independent administrators are non-government directors of an organization and help the corporation to
improve corporate credibility and decorate the governance requirements. In other words, an unbiased director is
a non-executive director without a relationship with a corporation which might affect the independence of his
judgment.

The tenure of the independent administrators the hall up to five consecutive years; however, they will be
entitled to reappointment via passing a unique resolution with the disclosure inside the Board’s report. As per
Section 149(2) – an independent director is a director other than managing director, whole-time director or
nominee director and in the opinion of the Board possesses relevant expertise and experience.

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As per Section 149(4) of the Companies Act, 2013 – every listed public company must have at least 1/3 rd of the
total number of directors as independent directors. This will include companies listed on the SME segment of
the stock exchange.

Following companies need to appoint at the least two independent directors:

 Public Companies with Paid-up Capital of Rs.10 Crores or more,

 Public Companies with Turnover of Rs.100 Crores or more,
 Public Companies with total outstanding loans, deposits, and debenture of Rs.50 Crores or more.

SMALL SHAREHOLDERS DIRECTOR

A listed organization, ought to upon the attention of at the least one thousand small shareholders or 10% of the
full quantity of the small shareholder, whichever is decrease, shall have a director which might be elected by
way of small shareholders.

WOMEN DIRECTOR

A company, whether be it a private company or a public company, would be required to appoint a minimum of
one-woman director in case it satisfies any of the following criteria:

 The company is a listed company and its securities are listed on the stock exchange.
 The paid-up capital of such a company is Rs.100 crore or more with a turnover of Rs.300 crores or more.

ADDITIONAL DIRECTOR

Provisions of Section 161(1) of the Companies Act, 2013 deal with the Additional Director. Alternate director
refers to personnel appointed by the Board, to fill in for a director who might be absent from the country, for
more than 3 months.

NOMINEE DIRECTOR

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Nominee directors could be appointed by a specific class of shareholders, banks or lending financial institutions,
third parties through contracts, or by the Union Government in case of oppression or mismanagement.

EXECUTIVE DIRECTOR

An executive director is the full-time working director of the company. They look after the affairs of the
company and have a higher responsibility towards the company. They need to be diligent and careful in all their
dealings.

NON-EXECUTIVE DIRECTOR

A non-executive director is a non-working director and isn't worried inside the ordinary working of the
enterprise. They would possibly take part in the making plans or coverage-making manner and task the
government directors to give you choices which are within the fine interest of the organization.

MANAGING DIRECTOR

A managing director means a director entrusted with the substantial powers of management of the company by
virtue of the articles of a company, agreement with the company, resolution passed in the company general
meeting or by the board of directors.

ALTERNATE DIRECTOR

Provisions of Section 161(2) of the Companies Act, 2013 deal with Alternate directors. Alternate director refers
to personnel appointed by the Board, to fill in for a director who might be absent from the country, for more
than 3 months.

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POWER OF DIRECTORS IN A COMPANY

Corporate entity incorporated is an artificial person, it is required to be represented by a living person. As a

result, directors are entrusted with the operation and management of any corporation. The office of the director
is the department of the firm that is in charge of all of the company's affairs and daily operations. The board of
directors is the highest authority in any company. According to Section 179, Companies Act 2013, the power of
directors of a company – entitled to make any and all decisions, and thus exercise all the power, which the company
has authority to enact.

In Bath v. Standard Land Corporation Limited 1, Neville J held that the board of directors is the firm's brain, and
the company only acts in their direction. Despite the fact that the position of director is so important, it is
bestowed with a variety of authorities to manage the company's affairs.

There are certain powers which can be exercised only when resolution has been passed at the board meeting.

Those powers include power to:

 To make calls
 To borrow money
 Issue funds of the company
 To grant loans are given guarantees
 To approve financial statements
 To diversify the business of the company
 To apply for amalgamation merger or reconstruction.
 To take over a company or to acquire a controlling interest in another company.
 Shareholders may impose restrictions on exercise of these powers.

1
Bath v. Standard Land Co. Ltd. [(1910) 2 Ch 408]

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POWERS TO BE EXERCISED WITH GENERAL MEETING APPROVAL

Section 180 of the Companies Act 2013 provides with those powers which can be exercised only if they
approved in general meeting

 To sale, lease or otherwise dispose of the whole or any part of the company's undertakings
 To invest otherwise in trust securities
 To borrow money for the purpose of the company
 To give time or refrain the director from repayment of any debt.

The title of lessee or purchaser is impacted if the director violates the constraints set by this provision. However,
it is unaffected if a person behaved in good faith and with due care and effort. This rule does not apply to firms
whose primary business is the sale or leasing of real estate.

THE AUTHORITY TO FORM AUDIT COMMITTEE

The board of directors has the authority to form an audit committee under section 177. It must have at least three
directors, one of whom must be an independent director. The member of the audit committee's chairperson must
be competent to read and interpret financial statements in order to be appointed. The audit committee will
operate in accordance with the terms of reference established by the board in writing.

POWER TO CONSTITUTE A NOMINATION AND REMUNERATION COMMITTEE, AS WELL AS

A STAKEHOLDER RELATIONS COMMITTEE

The board of directors can form a nominating and remuneration committee as well as a stakeholders'
relationship committee under section 178 of the Companies Act 2013.

In the nomination and remuneration committee, there should be three or more non-executive directors, half of
whom must be independent directors. A board of directors can also form a stakeholder relationship committee if
there are more than 1000 shareholders, debenture holders, or other security holders. This committee is
responsible for resolving shareholder complaints.

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POWER TO MAKE CONTRIBUTION TO CHARIATABLE FUNDS AND OTHER FUNDS

Under section 181 of the act, the board of directors might give to a real and Bonafede cause as a charity. The
only stipulation is that if the contribution exceeds 5% of the company's net earnings, the company's
authorization must be sought in a public meeting.

POWER TO MAKE A POLITICAL CONTRIBUTION

Companies can make political contributions under section 182 of the Companies Act 2013, although they must
not be government-owned or have been in operation for less than three years. There is a 7.5 percent cap on
corporate contributions to political parties, which must not exceed this amount. Any contribution should be
approved by the board of directors first.

POWER TO CONTRIBUTE TO NATIONAL FUND

Directors are authorised to contribute to the National Défense Fund and any other fund established for the
purpose of national defence under section 183 of the Companies Act. Any amount of contribution is acceptable;
the only requirement is that the amount contributed be disclosed in the profit and loss statement for the financial
year to which it pertains.

POWER OF BOARD SUBJECT TO OTHER PROVISIONS

While using the power vested in the board of directors, the board must adhere to the rules and provisions of the
following –

1. The Companies Act

2. The Memorandum of Association

3. The Articles of Association

4. Any Regulation, made by the company during general meetings.

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THE DELEGATION OF POWERS OF THE BOARD

The Board of Directors may delegate powers such as investing monies, granting loans, giving guarantee or security
by passing a resolution in the board meeting:

1. Committee of Directors

2. Managing Director

3. Manager

4. Any other principal officer of the company

5. The principal officer of a branch office

THE INTERVENTION OF SHAREHOLDERS IN EXCEPTIONAL CASES

In following exceptional situations, the general meeting is competent to act in matters delegated to the Board:

 When directors have acted mala fide.

 When directors have due to some valid reason become incompetent to act.
 The shareholders can intervene when directors are unwilling to act or there is a situation of deadlock.
 The general meetings of shareholders have residuary powers of a company.

RESTRICTIONS O POWER OF THE BOARD

The firm can set restrictions and conditions on the board of directors' power in accordance with Section 179
requirements. Furthermore, it is the shareholders' responsibility to impose constraints and conditions on the
board's power. In order to do so, the shareholders must pass an ordinary resolution at a general meeting.

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DUTIES OF DIRECTORS

The Ineffectiveness of the Company Act 1956 in enforcing corporate governance has been demonstrated
repeatedly in recent years by major corporate failures such as Kingfisher, Sahara, and Satyam. The Directors are
always to blame for failing to achieve Shareholder expectations and, on rare occasions, betraying stakeholder
feelings under the garb of charisma, so manipulating corporate systems for personal advantage. Nearly 50 years
after the previous update to address this issue, the Companies Act of 2013 was passed. It is based on the
following principles: board responsibility, shareholder protection, self-regulation, and disclosure transparency.

The 2013 amendment ensured a number of effective measures by defining the Directors’ responsibilities and
liabilities, as well as the penalties that would be enforced if they were not met.

The obligations of directors are enumerated in Section 166 of the 2013 Act, and they apply to all types of
directors, including independent directors.

Two main kinds of ‘Roles’ and ‘Obligations’ of Directors:

1:- The roles, responsibilities, and obligations that promote corporate governance through directors’ sincere
efforts in efficient management and prompt resolution of critical corporate issues, as well as sincere and mature
decision-making to avoid unnecessary risks to the corporation and its shareholders.

2:- the interests of the company and its stakeholders ahead of personal interests.

The ‘Duties of the Directors’ are Stipulated as follows in ‘Section 166 of the 2013 Companies Act’:

 How Director Shall Act-

A director must behave in compliance with the company’s Articles of Association.
The law in subsection {1} stipulates that a director shall act according to the article of association of the
company. Although this does not mandate any specific laying down of the duties if that is so, it will be a
desirable provision. A director must act in the best interests of the company’s stakeholders and promote
the company’s objectives in good faith.
 Acting In Good Faith and in Best Interest-
The next subsection {2} provides that a director shall act in good faith. This encapsulates a great amount
of subjectivity but at the same time should be seen from an ordinarily prudent man’s perspective. It has
also been held that all efforts of directors must be directed towards benefiting the company 2. Pertinently,
a wide coverage has been made by usage of both the terms “members” as well as “shareholders”.

2
Turner Morrison & Co v. Shalimar Tar Products 1980 50 CompCas 296 Cal.
11
 “Members are those persons who agree in writing to become members and whose names are entered in
the register of members or whose names are entered as beneficial owners”. 3 Necessarily it does not
follow that all shareholders are members and vice versa.
 Acting with Care, Skill & Independent Judgement-
Subsection {3} goes on to lay down that the director shall exercise his duties with due and reasonable
care. Although there is a great subjectivity involved here the touchstone for the same can be that of what
a reasonable would do in given circumstances. Further, an exercise of the independent judgment
indicates that there should be no external influence, he should have complete freedom to reach to his
judgement.
 No Conflict of Interest-
The following subsection {4} stipulates that a director should avoid conflict of interest. This prescribes
that a director should not get involved in such a situation where conflict may arise in his personal
interest and the company’s interest. Whenever any such kind of situation arises, precedence should be
given to the company’s interest over his personal interest.
 No Undue Gain or Advantage-
The provision of the subsection {5} stipulates that no personal benefit should be made out of the
company’s business neither it should be accrued to director’s relatives, partners, associates.
This section also provides for disgorgement of gains as the intent behind this is that there should not be
any loss to the company.
 No Assignment-
Subsection {6} prohibits the transfer of the office’s rights to another person. He cannot assign his office,
and if done it shall be void.
 Contravention-
The last subsection {7} lays down the penal provisions where a director contravenes the section. Such
director shall be punishable with fine which shall not be less than one lakh rupees but which may extend
to five lakh rupees.[15] Although this attracts a penalty it does not ask for the vacation of office u/s 167
of Companies Act 2013.
 A director must exercise impartial judgment in carrying out his responsibilities with due consideration,
ability, and diligence.
 A director should always be mindful of potential conflicts of interest and strive to prevent them in the
best interests of the company

3
Section 2 {55} of the Companies Act 2013.
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  Before authorizing related party transactions, the Director must ensure that proper deliberations have to
be taken place and that the transactions are in the company’s best interests.
 To ensure that the company’s vigilance system and users are not harmed as a result of such use.
 Confidentiality of confidential proprietary knowledge, business secrets, inventions, and unpublished
prices must be maintained and should not be revealed until the board has authorized it or the legislation
requires it
 A Company's Director cannot appoint his or her office, and any such assignment is invalid.
 If a company director violates the provisions of this section, he or she will be fined not less than one lakh
rupees but not more than five lakh rupees.
 The Companies Act of 2013 also assigns different roles to Independent Directors in order to ensure the
Board’s independence and fairness. An Independent Director is a member of the Board of Directors who
does not hold any stock in the company and has no financial ties to it other than the fees it earns for
serving on the board. According to the Companies Act of 2013, Schedule IV
 Protecting and promoting the interests of all stakeholders, especially minorities shareholders.
 In the event of a conflict of interest among the stakeholders, acting as a mediator.
 Assistance in delivering an independent and fair decision to the Board of Directors.
 Adequate attention is paid to transactions between related parties.
 Any unethical activity, code of ethics breach, or alleged fraud in the company should be reported
honestly and impartially.

General Duties of Directors:

 The duty of good faith-

The directors should act in the best interest of the company, interest herein implies the interest of present
and future members of the company, given the going concern principle. They should not exploit
corporate opportunities to their own personal benefit resulting in secret profits. 4 The good faith would
require that all the endeavours of the directors must be directed to the benefit of the company. 5 Greatest
good faith is expected in a discharge of their duties.6
It has been held that men who are in complete control of a company’s business must not take the
company’s interest at liberty as they are bound to protect the same. 7 Recently the Delaware Supreme

4
Cook v. Deeks {1916} 1 AC 554
5
Bank of Poona Ltd v. Narayandas, AIR 1961 Bom 252 at 253
6
Turner Morrison & Co v Shalimar Tar Products {1980} 50 Comp Cas 296 Cal.
7
Supra, at 1.
13
 Court ruled out to postulate the character of the duty of good faith wherein it was made clear that
negligent conduct is different from conduct in bad faith because statutory provisions differentiate
between the two. If the conduct is in absolute disregard with duties and responsibilities then it would
constitute bad faith. Mere failure to act in good faith does not impose fiduciary liability, as it is a
subsidiary element of duty of loyalty.8
 Duty of care-
Director by virtue of his esteemed position should take utmost care and due diligence while working in
the best interests of the company. However not more than what an ordinarily prudent man would have
done can be expected out of him. The duty of care is uniform for all directors. 9 Such care need not be
extraordinary in nature. This degree of care and skills shall vary with the nature of the business. 10
However, courts have extended relief where liability has been incurred even after acting in good faith.
They are not to be held liable for mere errors of judgement.11
 Duty not to delegate-
As directors are agents of the company, they already have delegated a power which can’t be delegated
any further. They are bound by the maxim delegates non potest delegare. It is their skills and judgement
on which shareholder rely and the same would get diluted when delegated but there are many exceptions
where delegation is permitted subject to the company law and the articles of association. Subsequent to
the delegation, if there is no suspicious activity, there is a presumption that affairs of the company are
properly conducted.12
 Duty to act honestly-
Directors hold the office of trust from where entails a duty to perform truly. Directors have an obligation
to act with honesty since they hold a fiduciary position of trust. 13 They should be held liable for diverting
from duties if that has culminated into frauds and losses.14

8
Stone v. Ritter 911 A.2d 362 (Del. 2006).
9
Jorchester Finance Co Ltd v. Stebbing 1989 BCLC 498 Ch D
10
In re city fire insurance, City Equitable Insurance Co, (1925) Ch 407
11
Lagunas nitrate co. vs lagunas nitrate syndicate [1899] 2Ch.392 (p.428, C.A.)
12
Ganesan v. Brahamaya & Co {1946} Comp LJ 262 Mad
13
York and North Midland Railway Co v Hudson (1853) 61 Beav 485: 22 LJ Ch 529
14
Official Liquidator v. P.A. Tendulkar {1973} 43 Com cases 382
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LIABILITIES OF DIRECTORS

Liabilities can accompany responsibilities; they might be statutory liabilities as defined by specific statutes, or
they can be general duties that apply to everyone uniformly.

For any and all acts prejudicial to the company’s interests, the directors may be held jointly or collectively
liable. Despite the fact that the Director and the Company are distinct bodies, the Director can be held
responsible on behalf of the Company in various situations. Like,

The liabilities of directors can arise in the following ways:

 Breach of fiduciary duty-

As the directors hold the office of trust along with power, they are expected to exercise this power in the
best interest of the company. Whenever there comes dishonesty in fulfilling this duty, there is a breach
of fiduciary duty. There is always a possibility of a conflict of interests but should such a conflict arise
the concerned director should make complete disclosure and try to obtain the confidence of stakeholders
in the general meeting. If such is not a case then it shall be held as a breach of fiduciary duty and he will
be liable for indemnification to the company.15It has been held that directors being the trustee have to
deal with business and its property the way they treat their own personal property and interest.16
 Ultra vires act-
Directors have powers subject to Companies Act, Memorandum and Articles of association. Whenever
they exceed these limits, they are personally liable for the act being ultra vires. But if acts are intra-vires
the company such acts can be subsequently ratified by the shareholders in the general meeting,
otherwise, if a company suffers a loss on ultra-vires acts of its directors, the company can claim such
loss from the directors.17
 Negligence-
As long as the Directors exercise reasonable care and due diligence, they are fulfilling their duties to the
company. But as soon as there is the failure to exercise such care and precaution, they are deemed to be
negligent in their conduct and are personally liable for the consequent damages. However, the error of

15
In P. K. Nedungandi v. Malayalee Bank Ltd A I R (1971) SC 829.
16
Fleming Spinning and Weaving Co Ltd v. Naik 9 Bom. 374.
17
Aggarwal V.S The Company Directors (1983).
15
 judgement will not be deemed as negligence. 18 “Business runs on a going concern, which will not be
possible if people doubt every step of the trust holders or office holders.”19
 Mala fide acts-
Directors are trustees for the company’s money and property, and they must operate in good faith. They
possess a position of trust, and if they abuse their authority, they will be held accountable for breach of
trust, and may be obliged to compensate for any losses caused as a result. They must report any profits
gained in the process of performing their obligations on a regular basis. If the misbehaviour is not wilful,
the director can be held accountable.

Further Liabilities:

 Tax Liability:
Unless a director or a Former Director can show that the non-recovery or non-payment of taxes is due to
gross negligence or violation of duty, any present or past Director (during the defaulter’s time period)
will be liable to pay the tax deficit as well as any penalties.
 Directors who fail to make the necessary disclosures under the SEBI (Acquisition of Shares &
Takeovers) Regulations, 1997 and SEBI (Prohibition of Insider Trading) Regulations, 1992 can face
legal action from SEBI.
 Refunding of share application or excess in share application fee
 To pay for qualification shares.
 Civil Liability for Prospectus Misrepresentation

Criminal Liabilities associated with Director’s name:

 Bounced or dishonoured checks: Under the Negotiable Instruments Act of 1881, a director’s signature
on a dishonoured check may result in criminal charges, in addition to the company’s income tax
violations under the 1961 Income Tax Act.
 Also, under the Employees Provident Funds and Miscellaneous Provisions Act, 1952, and the Factories
Act, 1948.

18
Re Brazil Rubber plantations and Estates Ltd, (1911) 1 Ch.425
19
Dovey v. Cory [1901] AC 477.
16
 Derivative action is characterized as an action taken by one or more shareholders of a corporation in
which the company is the plaintiff and relief is sought on its behalf. It must, however, be presented in a
representative manner.
 A shareholder can bring an action against the company and its directors for matters that are in violation
of the company’s Memorandum or Articles and that no majority shareholder can sanction.
 Directors and the corporation could be held liable if the majority of shareholders engage in “fraud on the
minority,” or discriminatory conduct. As a result, this is an extremely valuable clause for Directors to be
aware of and strive to take advantage of as much as possible.
 The Companies Act requires a corporation to purchase insurance to cover itself against losses caused by
its directors. A director may also purchase insurance to compensate for losses incurred due to liability to
the company, with the premium charged by the company.

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REMOVAL OF DIRECTOR (Section 169 of the Companies Act, 2013)

As per section 169 of the Companies Act, 2013 a company may remove a director before the expiry of the
period of his office by passing an ordinary resolution after giving the director a reasonable opportunity of being
heard.

The removal of directors takes place by:

 Shareholders
 Company Law Tribunal
 Resignation

REMOVAL OF DIRECTORS BY SHAREHOLDERS

A director can be dismissed from his position by an ordinary resolution before the end of his term of office,
according to Section 169 of the Companies Act 2013. This section isn't applicable if:

i. The tribunal appoints the director in accordance with section 242.

ii. The corporation has chosen the proportional representation method of electing two-thirds of its directors.

A specific notice is necessary to remove a director, and such notice must include the intention to remove the
director and be served at least 14 days before to the meeting. As soon as the company receives such notice, the
copy of such notice is furnished to the director concerned. Then the concerned director has the right to make a
presentation against the resolution in the general meeting. If a director makes a representation, then its copy
needs to be circulated among the members.

REMOVAL OF DIRECTORS BY THE COMPANY LAW TRIBUNAL

The removal of directors by the Company Law Tribunal can be done under section 242(2)(h). When an
application is made to the tribunal for relief from oppression or mismanagement, then it may terminate any
agreement of the company which has been made with a director. When the appointment of a director is
18
terminated then he cannot serve the managerial position of any company for five years without leave of the
Tribunal

PROCEDURE FOR REMOVAL OF DIRECTOR

 A special notice shall be sent to the company for the removal of the director at least 14 days before the
general meeting.
 The company shall send a copy of the special notice to the director concerned.
 The director concerned shall have a right to make a written representation against his removal.
 The company shall give notice of the resolution for the removal of the director to all the necessary
persons at least 7 days before the general meeting along with-
 A copy of the written representation
 Fact of written representation made by the director
 Where circulation of written representation is not possible, the director may require it to be read out at
the meeting.
 The company shall file e-form DIR-12 with the registrar within 30 days from the date of passing the
resolution.

RESIGNATION OF DIRECTOR (Section 168 of the Companies Act, 2013)

As per Section 168 of the Companies Act,2013 , a director may resign from his office by giving a due notice to
the company and the board shall take note of it and intimate the same to the Register of companies. The Board
shall also place the fact of such resignation in the next meeting. The resignation 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 his notice,
whichever is later. The liability of such resigning director even after his resignation shall extend to all the
offences which occurred during his tenure. Lastly where all the directors of a company resign from their office,
the Central Government shall appoint such required number of directors who shall hold office until the directors
are appointed by the company in the general meeting.

19
Previously, there was no provision for a director's resignation or the mechanism by which he or she may quit.
The resignation was acknowledged under the requirements of Section 318 of the Companies Act of 1956. It was
decided that when a director resigns his position, he is not entitled to pay under this section. The provisions for
resignation will be followed if they are mentioned in the articles. The court held in Mother Care (India) Pvt. Ltd.
v. Ramaswamy P Aiyar that a director's resignation is valid even if he is the sole director in the office.

PROCEDURE FOR RESIGNATION OF DIRECTOR

 A director may resign from his office by giving a notice in writing to the company.
 The notice of resignation may be filed by the director with the registrar in e-form DIR-11 within 30 days
of resignation.
 On receipt of the notice given by the director, the Board of Directors must present the same in the
General Meeting to the shareholders so that they are informed of the same.
 The Company must file e-form DIR-12 with the registrar within 30 days of receipt of notice of
resignation.
 The effective date of resignation will take effect from: –
i. the date on which the notice is received by the company.
ii. the date specified by the director in the notice.

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CONCLUSION

The board of directors is the heart and soul of the firm, and they are crucial to its success. Because more power
comes with more responsibility, firm management should be in the hands of competent people who know how
to utilize their power wisely.

The firm is governed by a board of directors, who convene in an organizational meeting to make all of the
company’s decisions. Despite the fact that several instances of corporate mismanagement have been
documented. In this situation, the directors are the first to be held accountable.

As a result, the Board of Directors must be more prepared than ever before to avoid any negative implications
for themselves or the company.

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