what happen When there are only two Directors Can one Director Resign ? In a private company, directors manage day-to-day operations and ensure legal compliance. But what happens if a company has only two directors, and one of them wants to resign? Understanding the legal implications is crucial under the Companies Act, 2013.
📝 General Rule for Director Resignation
-
A director can resign voluntarily by submitting a resignation letter to the board.
-
The board must accept the resignation and record it in the minutes.
-
The company must file Form DIR-12 with MCA to officially update its records.
⚖️ Resignation When Only Two Directors Exist
When a company has only two directors, certain legal constraints apply:
-
Minimum Requirement:
-
A private company must always have at least two directors.
-
If one director resigns, the company will have only one director, which violates the Companies Act, 2013.
-
-
Implication:
-
The resigning director cannot legally resign unless the company appoints another director to maintain the minimum requirement.
-
If the director resigns without appointing another, the company becomes non-compliant, risking penalties.
-
⚙️ Step-by-Step Process When Only Two Directors Exist
| Step | Action |
|---|---|
| 1️⃣ | The resigning director submits a resignation letter with the effective date. |
| 2️⃣ | The board identifies a replacement director to maintain the minimum number. |
| 3️⃣ | The board passes a resolution accepting the resignation and appointing a new director. |
| 4️⃣ | The company files Form DIR-12 with MCA to update both the removal and new appointment. |
| 5️⃣ | The company issues an acknowledgment letter to the resigning director. |
✅ Key Point: The director’s resignation is effective only after a new director joins, ensuring compliance.
🧩 Example
Suppose ABC Pvt Ltd has two directors, Mr. X and Mr. Y:
-
Mr. X wants to resign.
-
The board appoints Mr. Z as a new director before accepting Mr. X’s resignation.
-
ABC Pvt Ltd files Form DIR-12 for both the resignation and new appointment.
-
Mr. X ceases to be a director legally after the process is completed.
If the company does not appoint a new director, Mr. X cannot resign, and the company risks non-compliance penalties.
✅ Key Points to Remember
-
A private company must have at least two directors at all times.
-
When there are only two directors, one can resign only after appointing a replacement.
-
Always file Form DIR-12 with MCA to update records.
-
Maintain proper board resolutions and acknowledgment letters to avoid legal issues.
Hope you get the clarity about When there are only two Directors Can one Director Resign .