Filing of eform 32 on cessation of directors and company secretaries

[Reshma]

Hi,

 

It's a well known proceedure that eform - 32 has to be filed on cessation of a director or company secretary on or before 30 days from the date of her/his cessation which is nornally understood as date of resignation.

 

But, as some of the companys' internal procedure the directors or company secretaries will be serving the notice period of 2-3 months after submitting their resignation and will be discharging all duties as directors/company secretaries, whereby they cannot be considered to have ceased to be such personnel.  Is it possible that the cessation can be considered at the end of such 2-3 months and eform 32 to be filed within 30 days from the end of 2nd/3rd month?

 

Is there any notification or clarification from the department with respect to this? 

 

Regards,

Reshma

[madhwesh acharya]

Dear Ms. Reshma,

 

Lets see your query from two ways:

 

1. Directors:

 

General principle in law is that - when a director (whether employee or otherwise) resigns, then the cessation should effect - whether the board accepts his resignation or not AND whether company files Form 32 or not.

 

In the resignation letter, if the director adds "notice period", he might imply:

 

a. The company may relieve him on a particular date as the company thinks fit (in this case, the cessation comes into effect on such day when company actually relieves him) OR

b. The company may relieve him on or before a particular date specified by him only (in this case, the cessation comes into effect on such day specified by him to be the last date mandated for relieving).

 

2. CS:

 

CS is an employee of the company. (If CS is also director on the board, then the cessation of directorship works in the aforesaid fashion and cessation of secretaryship is to be done separately).

 

Resignation / relieving of CS is to be effected in the same way - it is done for any other employee. However, since, the appointment will be done by a board resolution, for relieving also, a board resolution will be an additional compliance.

Hence, we can conclude that theoretically "date of resignation" and "date of cessation" are different and form 32 shall be filed from the date of "cessation" coming into effect but not the date of "resignation".

 

Member's views solicited.

 

 

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Regards,
Madhwesh K
Company Secretary
Bangalore
9980672126

[kumar basant]

Dear Friends

I would like add one thing that,  a director can  resign anytime other than MD or WTD and it does not matter the Company accepts his resignation or not.

It also does not matter if he has having any Notice period or not, settelment of notice period is not a constraint in giving resignation from the post of Director or CS.

Please let me know, if I am misinterpreting the provisions of the Companies Act, 1956.

Regards..

Kumar Basant Bhagirathi

[madhwesh acharya]

Dear Mr. Kumar Basant,

 

I partially agree with your following openion:

 

"It also does not matter if he has having any Notice period or not, settelment of notice period is not a constraint in giving resignation from the post of Director or CS."

 

Because, if the director, in his resignation letter, subjects  hemselfe to notice period, then cessation comes into effect when the company relieves him or the end of notice period which ever is earlier.

 

In case of CS, there is no provision in law or judicial precedent which provides that his office shall cease on his resignation itself. So, the office of CS ceases only when his resignation is accepted by the board through a resolution.

Member's views solicited.

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[kumar basant]

Dear Acharya

I agree on the first part which is

Because, if the director, in his resignation letter, subjects  himself to notice period, then cessation comes into effect when the company relieves him or the end of notice period which ever is earlier

But on the second part,

Act does not prevent a CS from resigning, unless his resignation is accepted by passing Board resolution by the Board. If a CS resigns on a particular date, it shall be considered as his resignation date even though there is Notice period.

And logically, why a Cs would wait for  Board resolution to be passed for his resignation.

and also strongly feel, a designated Director other than MD or WTD can resign any time from his post, and he could still continue to be the employee, why he should wait for approval from the Company as far as Act is concerned.

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Regards,

CS Kumar Basant Bhagirathi

[madhwesh acharya]

Dear Mr. Kumar,

 

Can you quote any precedents / notifications (because i did not find any - in our curriculam or in Ramayya).

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[kumar basant]

Dear Acharya

I don't have any notification etc in this regard... and also thinks no where in the Companies Act, 1956 or further amendments there is an obligation for giving effect to resignation of Director(other than MD or WTD) unless the a Board resolution is passed to that effect.

I am just going through what is the requirement of the Act, 1956.

If you have any supporting notification etc supporting what you say, please let all of us know about it, it would be a great for everyone.


Regards..

Kumar Basant Bhagirathi

[Reshma]

Dear Mr.Acharya,

 

I endorse the rationality behind your explanation about a company secretary's resignation and cessation.  There's  are couple of other things :

 

(a) For filing eform 32, as an evidence of cessation, we need to attach resignation letter of the company secretary.  For Eg : if the letter is dated 01.04.2010, the eform needs to be filed by 01.05.2010. Isn't it?  whereby the CS ceases to be CS sometime in end June'10. 

 

Is this possible that we get another resignation letter for the purpose of compliance with the Act?

(b)  Your explanation can be given effect to as this is the best secretarial practice.  But, practices are followed only when it is in one's favour and, also, practices hardly have any legal compulsion.  If there are any departmental clarification supporting your explanation would have helped me.

 

Thanks,

Reshma

[Reshma]

Hi,

 

I guess we can find this in Chandrate's.  Anybody in group has?  Please

 

Reshma

[Pracheta]

Dear Reshma,

I agree with the views of Mr.Madhwesh that Board has to pass a resolution for accepting the resignation of the Company Secretary. I guess the Board resolution can be used as an evidence of cessation while filing form.32 and hence the date of relieving mentioned in the Board resolution can be considered as the date of cessation.

Other views are solicited.

Thanks.

Pracheta

[Reshma]

Dear Pracheta,

 

Thank you for the suggestion.  The idea of using board resolution can be good evidence of cessation.

 

I would like to know whether Madhwesh has anything to add to this.

Regards,

Reshma

[CS.Omkar]

Dear Reshma,

 

Director/CS while giving his resignation can also mention his relieving date (if agreed) as "effective date of his resignation". Then weu will not have any two contrary documents (date). Both Board Resolution and Resignation letter will speak of one date as date of cessation.

 

Draft of such letter may be as follows:

Contrary views if any solicited....

 

Regards...Omkar

 

============================================

From:

 

Dheeraj M.

214, Premier Presidency,

Bangalore

 

To:

 

Board of Directors

ABC Technologies Private Limited

Nos. 108, II Floor, Opposite Sterling Apartments,

100 Feet Ring Road, Banashankari 3rd Stage,

Bangalore - 560085

 

Dear Sirs,

  

Sub: Resignation to my position as Company Secretary

  

I, Dheeraj M., wish to resign from my position of Chief Financial Officer and Company Secretary of ABC Technologies Private Limited with effect from 30th June 2010. Please take necessary action in this regard.

  

Thanking you,

 

Yours sincerely,

 

 

Dheraj M.

 

Place: Bangalore

Date: 30th March 2010

==================================================

[kumar basant]

Dear Acharya/Reshma/Pracheta

I agree with the views of Mr.Omkar.

I am saying once again,

Its a wish of Director other than MD/WTD and CS when he want to resign, it does not matter when the Board accepts their resignation and pass resolution to give effect to them.

The effective date of resignation would only be that which is mentioned in the resignation letter and it would not be that date when the Board accepts them.

Are you members want to say that if you are a CS/Director in a Company and you resigned on 1.3.2010 but the Board accepts that resignation on 30.06.2010 or suppose never accepts your resignation, does that mean you never resigned or you resigned on 30.06.2010.

Can you members please explain the above situation,

I think one would wait than because resignation has not been accepted by the Board as per your views.

Please enlighten.

Regards...

CS Kumar Basant Bhagirathi

[Astarag]

hi,

 

i think the board needs to take note of the resignation only

 

it may pass a resolution like

 

 

The Chairman informed the board that Shri ......., Director of the Company has asked for resignation from the position of Director. The resignation letter Dated .......was placed on the table and initialed by the Chairman for the purpose of identification. The board placed deep appreciation to the contribution made by Shri.........and took note of his resignation. In this regard the following resolution was passed

 

“Resolved that the resignation tendered by Shri. ...........be and is hereby accepted.

Resolved further that Shri. .................,  Director of the Company be and is hereby authorized to file the Form no 32, relating to the resignation of Shri. ............from the position of Director of the Company and to do all such acts, deeds and things as may be necessary in this regard.”

so effective date ll be the date in resigation letter and accordingly form 32 ll be filed

the date in form 32 need not be the date of passing the resolution

 

this is a different thing that he ll be serving the company during notice period but he can not be held liable during for his action during notice period

it can also happen that he may serve one month notice and pay in lieu of notice for the rest one or two month of total notice period

internal procedure can not change the law

after resignation is given .the person will only be handing over his duties to his successor during the notice period

in some companies they stop the salary once resignation is tendered and payment is made afterwards after notice period

in that case is it right to file 32 with the date of relieving ?

with regards,

Cs. P.A. Patnaik

[n garg]

Dear All,

 

Please don't get confused with the acceptance of letter of resign. Normally in our case it has been noted that when a company secretary resign then the company normally show that the resign has been accepted with effet from the next board meeting , which is right in nature.

 

Friends we are also required to understand the exact position of the company. If we are a CFO and VICE President etc and see that the person concern who is related to the board (is Director or Secretary) and resign in the middle of the quarter. It has to be seen practically that the resign presented shall be present before the whole time director only. Independent director who normally are not there in the company cannot understood what is the reason for resign. Then it become necessary to accept the resign of the person in the next board meeting only. For example A resign on 01st February and the next board meeting is due on 30the April. then the company has to wait for the next meeting to present the resign and acept by the board. So this is a practical thing to accept the resign in the next board meeting that does not matter when the resign was actually given.