Employment lawyers - how do I resign as a director?(19 Posts)
I have been joint MD of my company for some time now. Two directors and one pt employee. However, the business is not doing well (recession has had a major impact in my industry), and I'm thinking that I may have to look for another job.
I presume it's not as simple as just handing in my resignation, given that I'm a director, but don't really know what to do/how to go about it if I do make this decision.
There are - at least not at the moment! - no debts.
I have to think it through very carefully because I know that my business partner will not be happy with my decision, so it might not be immediately amicable.
If anyone can help I would be eternally grateful.
Are you a company director registered as such? If so you need to ensure you contact companies house and resign with them as well as with the company.
Yes I am. Is that just a matter of writing to them?
If you go to the Companie House website you can download a form that you need to fill in and post back to them.
Do you have a director's service agreement or similar? Do you part-own the company?
Secondly, are you a shareholder as well as a director? If so, you will need to deal with that issue.
If the shares are fairly worthless, then it wont be such a big issue. However, if they do have a value and/or you have made loans to the company or owed other sums then you should take legal advice on that - says a lawyer . But you should.
Also, check the position regarding company borrowings. Have you made any personal guarantees?
Company is owned 50:50, and I am a shareholder (but shares will be worthless)
We have no borrowings/debt and no personal guarantees - so I'm hoping that if I have to go down this route, extricating myself shouldn't be too difficult.
I don't really want to do this - we have been running the company for 12 years .
Sadly, unless we get some business in the next month or so, somethign will have to happen.
Thanks all for help/advice - much appreciated.
You need to resign your directorship and transfer the share (ideally) to your partner.
Alternatively, if you both want to cease trading and aren't bothered about retaining the company's name (as opposed to any different trading name), you could disolve the company if there is no debt owed to third parties.
Filing the Companies House form is not the correct way to resign, it's just a record that you have resigned, not your actual resignation.
The correct way to resign is in accordance with whatever your service agreement says - usually by writing to the company and tendering your resignation. If you don't have a service agreement you can just write a letter to resign. The company secretary should then file the necessary form with Companies House to get the records updated. However provided you have submitted your resignation to the company you will be treated as having resigned from the date it became effective irrespective of whether the Companies House form is filed.
You say the company is "not doing well": I don't know how bad things are but you should be aware that you may still have liabilities as a director which result from the period before you resigned and your resignation won't affect those. You say there are "no debts" so this shouldn't be much of an issue - do you have Director's and Officer's insurance to cover any of these liabilities if they arise? Usually I'd always advise a director of a company in difficulties to seek legal advice before resigning - if you think that the company is in such trouble that it shouldn't be trading it's not enough simply to resign, if you don't take any other action you could still be pursued by a liquidator or administrator if the company, or other directors, have committed any wrongful acts such as continuing to trade the company when it had no reasonable prospect of avoiding insolvency.
Good point Mrs Teddy re trading whilst insolvent. However, do you have any creditors OP? If not, less of an issue.
Further, I am presuming that, given the size of the business, you don't have a service agreement? If not, you can advise the other director of your intention (in writing) and write the letter to companies house. However, the key is advising companies house.
If you have an SA, then you do have to work any notice set out in that SA. However, if the company is about to go bust, it is all a bit of moot point.
Best to speak to the other director in the first instance re your intentions and take it from there.
Sorry to disagree, but advising Companies House is irrelevant, you resign when you resign and Companies House filing is just a record of it, if it's not done you've still resigned. Make sure you keep a copy of the letter though, and proof of delivery to the company's registered address.
You can't file the Companies House form yourself as it has to be filed by the secretary or a director and you won't be a director if you've resigned - I've seen people do this and have the form rejected by Companies House. Companies House won't accept a letter from you, it has to be a form TM01.
Even if there are "no debts" there may still be trade creditors, which most people don't think of as debts, these are still regarded as debts for the purposes of insolvency.
We will have to disagree Mrs Teddy.
I agree with you that the OP (of course!) has to advise the company.
However, thereafter, companies house has to be advised too to make sure the records are properly up to date.
I don't think that the OP was planning to disappear off in to the sunset so therefore of course, she would be resigning from the company.
As I said, I think it more probable that there is no service agreement. If there is then that needs to be checked as there can sometimes be a clause contained therein stating that the director cannot resign without the prior approval of the board. However, if there is no service agreement, it is as simple as speaking to the OP's fellow director intimating a wish to resign forthwith and then confirming that in writing.
As you say, the form can then be completed by the director who is still in situ.
By all means disagree with me, but see s.167
Companies Act 2006, the company must notify the Registrar of Companies of changes to directors within 14 days. It's for the company to deal with Companies House, not the OP. Failure by the company to do so won't affect the OP's resignation so she doesn't need to worry about it.
It is in the op's best interests to ensure that companies house is advised after her resignation and not leave it in the hands of the other director - particularly as the company is in financial trouble. We're not taking a share sale of an ongoing concern here.
As I have said, I agree with you that strictly speaking, the company needs to file the appropriate form.
Being practical about this, it is sensible for the op to ensure that is done rather than simply hoping that her fellow director is aware of the intricacies of the companies act. If I was representing her, I certainly wouldn't be leaving advising companies house to chance.
OP - basically fill the companies house form in and get the company secretary to sign it and make sure it is sent!
Hope all goes well.
Being practical about it, the OP can't advise Companies House herself, nor can she force the remaining director or secretary to do it, so how exactly is she supposed to ensure that Companies House is advised? That's my point really, she can't ensure it so beyond asking the remaining director or secretary to do it, all she can do is resign.
I've advised directors who were in this position, remaining directors were being difficult and didn't file the forms at Companies House. Made no difference to the effectiveness of the resignation.
Who said anything about forcing anyone?!
It is entirely legitimate to request that this is done promptly. Whilst it makes no difference to the resignation per se, it is appropriate and sensible to make sure companies house records are updated - particularly if the company may be wound up
This appears to be a small company and the working relationship between the directors appears fine. If that is the case, what is the issue in the op filling in the form and asking for it to be signed and sent of for the sake of good order.
off to watch strictly results now - I'll leave you to the companies act. Mrs teddy
Oh please don't start fighting over my thread!!!
Thank you all very much for your advice. I am very grateful and it's so reassuring to know that there are people here who can help.
I think I'm actually the company secretary (I do remember that we had to distribute various roles between the two of us!), so I may have to work out just how I can file something when I'm no longer part of the company!!!
Relationship with my partner is good - but probably will be difficult if I decide that things need to be wound up. I'm not sure, but this is why I wanted to know about procedures before I make any decisions.
Anyway, we will hear today if we have won a big project, which will stave off the company's demise, so please all keep your fingers crossed for us.
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