Due to internal problems in the working of M/s Infighting Detergents Ltd., Mr. Satyam and Mr. Shivam, a Director, have submitted their resignations and decided to disassociate themselves with the working of the company.

CS Professional · Advanced Company Law and Practice · PYQS · June 2021
Due to internal problems in the working of M/s Infighting Detergents Ltd., Mr. Satyam and Mr. Shivam, a Director, have submitted their resignations and decided to disassociate themselves with the working of the company. Mr. Sundram, the Managing Director, decides to refuse their resignations. Examine whether the Managing Director can compel Mr. Satyam and Mr. Shivam to continue as per the provisions of the Companies Act, 2013.

Answer & Explanation:

Section 168(1) of the Companies Act, 2013 read with Rule 15 of the Companies (Appointment & Qualification of Directors) Rules, 2014 provides that 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 give intimation to the Registrar of Companies in Form DIR-12 within 30 days from the date of receipt of notice of resignation from a director. The proviso to section 168(1) of the Companies Act, 2013 read with Rule 16 of the Companies (Appointment & Qualification of Directors) Rules, 2014 states that a director may also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar of Companies within 30 days of resignation in Form DIR-11. Furthermore, section 168(2) of the Companies Act, 2013 states that 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. Therefore, the law does not give an option to the Managing Director or the Company or the Board to reject the resignation of a director from his office or to force him to continue. Hence, in the given case, the Managing Director of M/s Infighting Detergents Ltd. doesn't have the legal authority to compel Mr. Satyam and Mr. Shivam to continue as directors in view of the above provisions.

Topics: Directors

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