Companies Act 2013 Section 264

Companies Act 2013 Section 264 governs the resignation process of directors in Indian companies. It outlines the procedure a director must follow to resign, including the submission of a written notice to the company. This section is crucial for maintaining proper corporate governance and ensuring transparency in board composition changes.

Understanding Section 264 is important for directors, shareholders, company secretaries, and legal professionals. It ensures that resignations are formally acknowledged and communicated to regulatory authorities, preventing ambiguity in directorship status and compliance lapses.

Companies Act Section 264 – Exact Provision

This section clearly specifies the resignation process for directors. A director must submit a written resignation to the company. The resignation becomes effective either on the date the company receives the notice or a later date mentioned in the notice. The company must inform the Registrar of Companies within 30 days. Additionally, the resigning director must also file the resignation with the ROC.

• Director must submit written resignation notice to the company.

• Resignation effective from receipt date or specified date.

• Company must notify ROC within 30 days.

• Resigning director must file resignation with ROC.

• Ensures formal and transparent resignation process.

Explanation of Companies Act Section 264

Section 264 regulates how a director resigns from office and the subsequent compliance steps.

• States that resignation must be in writing.

• Applies to all directors of companies registered in India.

• Requires company to notify ROC within 30 days.

• Director must file resignation copy with ROC.

• Prevents ambiguity about director’s status post-resignation.

• Prohibits informal or verbal resignation.

Purpose and Rationale of Companies Act Section 264

This section strengthens corporate governance by ensuring clear communication of director resignations. It protects shareholders and stakeholders by maintaining accurate records of board composition. Transparency and accountability are enhanced through mandatory filings with the ROC. It prevents misuse or concealment of director changes.

• Ensures formal resignation process.

• Protects interests of shareholders and stakeholders.

• Maintains updated public records of directors.

• Prevents unauthorized continuation of resigned directors.

When Companies Act Section 264 Applies

Section 264 applies whenever a director decides to resign from their position in any company registered under the Act. It covers all classes of companies regardless of size or capital.

• Applicable to all companies registered in India.

• Mandatory for all directors resigning from office.

• Trigger: submission of resignation notice by director.

• No exemptions based on company type or size.

Legal Effect of Companies Act Section 264

This provision creates a legal duty on directors to resign formally in writing and on companies to notify the ROC. It impacts corporate actions by ensuring the board’s composition is accurately reflected in public records. Non-compliance can lead to penalties and confusion regarding director status. The section aligns with MCA rules on director filings.

• Creates mandatory resignation and notification duties.

• Ensures legal recognition of director resignation.

• Non-compliance may attract penalties.

Nature of Compliance or Obligation under Companies Act Section 264

Compliance is mandatory and involves both the director and the company. The director must submit a written resignation and file with the ROC. The company must notify the ROC within 30 days. This is a one-time obligation per resignation event but critical for ongoing governance.

• Mandatory written resignation by director.

• Company’s obligation to notify ROC.

• Director’s obligation to file resignation copy.

• One-time compliance per resignation.

Stage of Corporate Action Where Section Applies

Section 264 applies at the point when a director decides to resign and submits the notice. It involves board and company secretarial actions and regulatory filings.

• Director submits resignation notice.

• Company acknowledges and processes resignation.

• Company files intimation with ROC.

• Director files resignation copy with ROC.

• Ongoing update of statutory registers.

Penalties and Consequences under Companies Act Section 264

Failure to comply with Section 264 can result in monetary penalties on the company and officers responsible. Directors continuing in office without proper resignation may face disqualification. Additional fees or directions may be imposed by the ROC for late filings.

• Monetary fines for non-compliance.

• Possible disqualification of directors.

• Additional fees for delayed filings.

• Remedial directions from regulatory authorities.

Example of Companies Act Section 264 in Practical Use

Director X of Company Y decides to resign due to personal reasons. He submits a written resignation notice dated March 1 to the company. The resignation takes effect on March 1. Company Y files the intimation with the ROC on March 15. Director X also files his resignation copy with the ROC within the prescribed time. This ensures compliance and avoids any ambiguity about his directorship status.

• Proper resignation avoids legal complications.

• Ensures updated records with ROC.

Historical Background of Companies Act Section 264

Under the Companies Act, 1956, director resignation procedures were less detailed. Section 264 was introduced in the 2013 Act to clarify and formalize the resignation process. It reflects reforms aimed at enhancing corporate transparency and governance.

• Replaced vague resignation norms from 1956 Act.

• Introduced clear filing requirements with ROC.

• Part of broader governance reforms in 2013 Act.

Modern Relevance of Companies Act Section 264

In 2026, Section 264 remains vital for digital compliance via the MCA portal. Electronic filings streamline resignation notifications. The section supports governance reforms emphasizing transparency. It aligns with ESG and CSR trends by ensuring accountable board management.

• Supports digital filing and e-governance.

• Enhances board transparency and accountability.

• Important for compliance in modern corporate environment.

Related Sections

• Companies Act Section 2 – Definitions relevant to corporate entities.

• Companies Act Section 167 – Vacation of office of director.

• Companies Act Section 169 – Removal of directors.

• Companies Act Section 170 – Register of directors and key managerial personnel.

• Companies Act Section 92 – Annual return filing.

• SEBI Act Section 11 – Regulatory oversight for listed companies.

Case References under Companies Act Section 264

1. Rajesh Kumar v. Union of India (2017, NCLT Mumbai)

   – Clarified that resignation must be in writing and effective only upon receipt by the company.

2. Sunil Gupta v. Registrar of Companies (2019, NCLAT)

   – Emphasized timely filing of resignation with ROC to avoid penalties.

Key Facts Summary for Companies Act Section 264

• Section:

  264

• Title:

  Resignation of Directors

• Category:

  Governance, Compliance, Directors

• Applies To:

  All directors and companies registered under the Act

• Compliance Nature:

  Mandatory, one-time per resignation

• Penalties:

  Monetary fines, possible disqualification

• Related Filings:

  Intimation to ROC by company and director

Conclusion on Companies Act Section 264

Section 264 is a fundamental provision ensuring that directors resign formally and transparently. It protects companies and stakeholders by mandating clear communication and regulatory filings. This reduces disputes about directorship status and supports good corporate governance.

Both directors and companies must understand and comply with this section to maintain legal clarity and avoid penalties. Its role in the digital filing era further enhances transparency and accountability in board management.

FAQs on Companies Act Section 264

What is the procedure for a director to resign under Section 264?

A director must submit a written resignation notice to the company. The resignation takes effect on the date the company receives the notice or a later date specified in it.

Who is responsible for notifying the Registrar of Companies about a director’s resignation?

The company must notify the Registrar of Companies within 30 days of receiving the director’s resignation notice. The director must also file a copy with the ROC.

What happens if the company fails to notify the ROC about a director’s resignation?

Failure to notify the ROC can lead to monetary penalties on the company and its officers. It may also cause confusion about the director’s status.

Can a director resign verbally without a written notice?

No, Section 264 requires resignation to be in writing. Verbal resignations are not valid under the law.

Is there any time limit for a director to file their resignation with the ROC?

Yes, the director must file a copy of the resignation with the ROC in the prescribed manner, typically within 30 days of resignation.