Not sure What is the Difference Between Resignation and Removal of Director. Directors play a crucial role in managing a company, and companies may experience changes in directorship through resignation or removal. While both processes result in a director leaving, they differ significantly in procedure, legal requirements, and implications.
Understanding these differences ensures compliance under the Companies Act, 2013 and protects both the company and the director from legal liabilities.
📝 1. Resignation of Director
Resignation occurs when a director voluntarily decides to step down from their position.
-
The director submits a resignation letter to the board.
-
The board accepts the resignation and records it in the minutes.
-
The company files Form DIR-12 with MCA to officially remove the director.
-
The director ceases to be responsible for company actions from the effective date.
✅ Key Point: Resignation is initiated by the director and does not require shareholder approval.
🏛️ 2. Removal of Director
Removal occurs when the company or its shareholders decide to terminate a director’s position.
-
The board or shareholders follow the Companies Act, 2013 procedure, usually requiring a special resolution.
-
The director receives notice and an opportunity to present their case.
-
After passing the resolution, the company files Form DIR-12 with MCA to remove the director officially.
-
The director remains liable for company decisions until the removal becomes effective.
✅ Key Point: Removal is initiated by the company or shareholders, not the director.
⚙️ Comparison Table
| Aspect | Resignation | Removal |
|---|---|---|
| Initiated By | Director voluntarily | Company or shareholders |
| Consent Required | Only board acceptance | Board resolution + shareholder approval (special resolution) |
| Procedure | Submit resignation letter → board accepts → file DIR-12 | Notice to director → special resolution → file DIR-12 |
| Legal Effect | Director relieved from liability from effective date | Director liable until removal takes effect |
| MCA Filing | Form DIR-12 required | Form DIR-12 required |
🧩 Example
-
Resignation: Mr. X decides to leave ABC Pvt Ltd and submits a resignation letter. The board accepts it and files Form DIR-12, ending his directorship legally.
-
Removal: ABC Pvt Ltd shareholders decide Mr. Y should leave due to non-performance. They pass a special resolution, notify Mr. Y, and file Form DIR-12 with MCA to remove him officially.
✅ Key Points to Remember
-
Resignation is voluntary, while removal is initiated by the company or shareholders.
-
Both require filing Form DIR-12 with MCA to update official records.
-
Directors must maintain proper documentation to avoid future disputes.
-
Companies must follow legal procedures strictly to comply with the Companies Act, 2013.
Hope you get the clarity about What is the Difference Between Resignation and Removal of Director.