Resignation of directors from a pvt. ltd. company

Hello,

In a Pvt. Ltd., company held by family members with a share capital for 4 lacs and 4 directors with a subscriptttion of Rs. 1,00,000 each/- (1000 shares of Rs. 100 each), if 2 directors resign, my questions are:

1. If the directors are willing to transfer the shares to the other 2 directors does there have to be a physical transaction of money (through bank) to release the outgoing directors?

2. If the company does not have the necessary funds to payup the outgoing directors can it do just a book entry of share transfer?

3. What is the procedure for resignation of directors and is the company liable to pay the resigning directors their share capital value after transfer of shares?

4. Is there a way to transfer the shares without paying out the resigning directors?

5. If a book entry can be done in the Accounts for the transfer of shares, how can the resigning director do the same director in his respective company?

Originally posted by : arasan
	Hello, In a Pvt. Ltd., company held by family members with a share capital for 4 lacs and 4 directors with a subscripttttion of Rs. 1,00,000 each/- (1000 shares of Rs. 100 each), if 2 directors resign, my questions are: 1. If the directors are willing to transfer the shares to the other 2 directors does there have to be a physical transaction of money (through bank) to release the outgoing directors? 2. If the company does not have the necessary funds to payup the outgoing directors can it do just a book entry of share transfer? 3. What is the procedure for resignation of directors and is the company liable to pay the resigning directors their share capital value after transfer of shares? 4. Is there a way to transfer the shares without paying out the resigning directors? 5. If a book entry can be done in the Accounts for the transfer of shares, how can the resigning director do the same director in his respective company?

The first important thing you are missing out is transfer of shares is between a transferor and transferee and the company whose shares are being transferred has nothing to do with it, till completely filled share transfer deeds are submitted to it for registering transfer.

Suppose in your case A B C D are 4 directors and A and B resign and want to transfer their shares to C and D then the transaction will be between ABCD and the company has nothing to do with it.

3. What is the procedure for resignation of directors and is the company liable to pay the resigning directors their share capital value after transfer of shares? - Procedure will be simply take resignation letters from the directors and get it confirmed in the board meeting of the Company (though as per some opinions it is not compulsory but still a good secretarial practice) Then file form 32 with ROC