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Resignation of Director Pvt Ltd Company

Sunil (Director) (48 Points)

02 May 2011

How one of the two directors can resign from a pvt ltd company? (Even if ot means to winding up). Other director is not willing to fulfil liabilities of the company and behaving unethically & even not willing to resign or close the comany. What is the way out to wind up the company without his consent? If resginging director is willing to clear whatever liabilities are there. Pl advice

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10 Replies

RG - A Helping Hand (Company Secretary) (13867 Points)
Replied 02 May 2011

Hi Sunil,

Greetings!!!

In a private limited company formal acceptance of resignation of an ordinary director is not mandatory. So in your case a director can resign by simply tendering his resignation letter to the other ill-behaved director without his formal acceptance.

Resigning director must ensure filing of form-32 regarding his resignation. After resignation immunity will be with the resigning director from the date of resignation regarding responsibility of the act of other director or company.

Best Regards

Richank G.

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 02 May 2011

Originally posted by : Sunil
	How one of the two directors can resign from a pvt ltd company? (Even if ot means to winding up). Other director is not willing to fulfil liabilities of the company and behaving unethically & even not willing to resign or close the comany. What is the way out to wind up the company without his consent? If resginging director is willing to clear whatever liabilities are there. Pl advice

Hello Sunil

I would defer from Richank's view.

A company is in existence till its not completly wound up.

Even if Pvt Ltd Company, if there are only 2 directors ( I presume there are 2 directors only) resignation

of one of the director cannot be accepted merely by formal resignation

unless accepted by Board and Board resolution passed to that effect.

Board acceptance means there should be atleast 2 Directors.

You need to have a new director appointed on board, and post appointment

one director can resign from the board.

Also as stated by you that one of director is not willing to resign , & close the company, so

where question comes of winding up of company.??

You can proceed to resign from the company post appointment of another additional director

on board.

Other views / Experts views solicited

regards

Santosh Shah

Sunil (Director) (48 Points)
Replied 02 May 2011

No he is neither willing to appoint new director nor wants to resign nor wants to wing up. Just complete non cooperation. There must be some way out to break the deadlock!!!

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 02 May 2011

Originally posted by : Sunil
	No he is neither willing to appoint new director nor wants to resign nor wants to wing up. Just complete non cooperation. There must be some way out to break the deadlock!!!

Hello Mr.Sunil

The other director cannot stop you from resigning. Just intimate him that if he does

not appoint another director, and on your resignation the onus would lie on him

for non-compliance with provisions of Companies Act 1956.

MCA will not allow a company with only one director, and will be liable to face consequences both to

director and the company.

Still he does not co-operate to appoint a new director, speak to ROC about the matter.

This would place you on safer side.

This is just my view.

Experts your valuable advice requested , as your experience will help better ways to come out of

such situation.

regards

Santosh Shah

RG - A Helping Hand (Company Secretary) (13867 Points)
Replied 02 May 2011

Hi Sunil,

You are requested to have a look at the case Law mentioned below:

Glossop V. Glossop (1907) 2 Ch.370

Once a Director has given a notice of resignation, he cannot withdraw it except with the consent of the company properly considered by the directors.

But where the articles contain a provision that a director may resign only if the Board consents, the resignation shall not be effective until the Board's consent is given and the resignation may be withdrawn in the meantime.

The resignation of a Director would become effective on and from the date it was tendered or submitted and from the articles of the association of the company it would be clear that resignation of a Director would be effective from the date it was tendered.

In case of resignation of a Director there is no formality that the Board of Directors should accept it before it becomes operative.

Please find below my point wise personal observation:

1. As regarding the provisions of Resignation of Director Law is silent so the same are governed by the articles of the company. So please go through the Articles of the company for better clarity.

2. In case of Resignation of an ordinary director no formal acceptance is required for sure. In conditions whatsoever. There is only one exception to this understanding and that is Article of the company contains provision regarding formal acceptance of resignation by an ordinary director.

3. However in case of resignation of MD, WTD etc formal acceptance is required by the board or general meeting subject to the provisions of Articles.

4. As far as maintainability of section 252 is concerned regarding minimum number of directors is concerned, it is responsibility of both the directors. But if one director is not ready to hold board meeting to appoint a new director and providing other director a suitable exit route due to mela fide intentions then the other director is simply free to tender his resignation and take exit route. However he will be responsible for his work till the date of his resignation.

Best Regards

Richank Garg

sunilagarwal (employe) (21 Points)
Replied 14 September 2012

How 2 directors can resign from a private ltd company, if the company has 4 directors

Tanveer Md Masood (Indispensable) (361 Points)
Replied 14 September 2012

DEAR EXPERTS,

IT IS ONLY IF THE MANAGING DIRECTOR RESIGNS FROM HIS OFFICE BEFORE HIS TENURE OF 5 YEARS , BOARD RESULTION AT BM NEEDS TO BE PASSED AND THE BOARD SHOULD FORMALLY ACCEPT HIS RESIGNATION. THIS IS BECAUSE THE MANAGING DIRECTOR IS A DOUBLE AGENT HE ACTS ON BEHALF OF THE BOARD OF DIRECTORS AND HE ALSO DISCHARGES THE RESPONSIBILITY OF EMPLOYEE OF THE COMPANY.

REGARDS,

TANVEER MD MASOOD

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 15 September 2012

Originally posted by : RG - A Helping Hand
	Hi Sunil, Greetings!!! In a private limited company formal acceptance of resignation of an ordinary director is not mandatory. So in your case a director can resign by simply tendering his resignation letter to the other ill-behaved director without his formal acceptance. Resigning director must ensure filing of form-32 regarding his resignation. After resignation immunity will be with the resigning director from the date of resignation regarding responsibility of the act of other director or company. Best Regards Richank G.

I agree with the Views of Richank Garg ji, In case of any Company the resignation is operated from the date of resignation however, in case the Board pass resolution and decide any other date for the relieving of the person and if he agrees, that date shall be taken as effective date of resignation.

In other case the date of resignation shall be the effective date of resignation, THE BOARD HAS TO NOTE THE RESIGNATION OF THE DIRECTOR, THERE IS NOTHING LIKE DECISION WHETHER TO RELIEVE OR NOT.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 15 September 2012

In case of resignation of Director form 32 can be filed with only attachment that is his resignation letter.

However, it is advised to file form 32 along with duly certrified copy of Board Resolution.

Sumit Thakur (1 Points)
Replied 23 July 2016

Hello to all. I am facing the same issue. Last year me and one other guy started a pvt. ltd. company. But now things are not working out. I cannot bear with his behaviour and inhibited growth of the company. He is not winding up the company and I cannot bear with him anymore. There are only two of us. I sent him a resignation but he is replying with an excuse that he cannot accept my resignation as he shall have to appoint a new director and he doesn't have the money for that.
I have other responsibilites so I want out. In the last year I didn't even earn a sum of Rs. 20,000. Now I am looking for jobs in other cities.
SO MY QUESTION IS HOW CAN I GET OUT OF THE COMPANY.
DO I HANDOVER A WRITTEN LETTER OF RESIGNATION AND LEAVE OR ARE THERE ANY OTHER FORMALITIES?

AND CAN I GET AN EXPERIENCE CERTIFICATE FROM THE OTHER DIRECTOR for the work I'd done during my time?

Please help me out. I have to give interviews pending next week. I'm getting frustrated.