How to Resign as Director of a Company

How to Resign as Director of a Company

Resigning as a Director

Written by Alan Davidson

Alan Davidson is a Chartered Accountant, director and founder of Pentins Business Advisers, entrepreneur and author of the Amazon best-seller “Achieve Your Business Vision”. With over 25 years of helping businesses succeed, Alan knows how to build a business with real value, while avoiding costly mistakes.

There are several reasons why you could want to resign as director of a company. Maybe you wish to retire, or focus your efforts elsewhere. You might not enjoy your role anymore, or find working with your fellow directors challenging.

Resigning as a director is actually a straightforward process, and simpler than you might expect. However, it’s important that you know the process to resign as director of a company, and that it’s done correctly.

Check your Shareholder’s Agreement

A Shareholder’s Agreement will often include a clause to cover the resignation of a director. Before resigning, you should read through your Shareholder’s Agreement, and be aware of your legal responsibilities. You might be required to leave on the day of resignation, give a certain notice period, and you may or may not be required to sell your shares and cut all ties with the company.

A Shareholder’s Agreement is a legally binding document that we highly advise all companies to sign to handle situations like these.

Inform directors and shareholders

Firstly, you should inform your co-directors and other shareholders of the company that you intend to leave. This is often done with a formal resignation letter, and should include any information about when you intend to leave. You don’t have to share your reason for leaving.

Inform Companies House

Additionally, you will have to inform Companies House of your decision to retire. This will change your association with the company from an “active” director, to “resigned”. You notify Companies House of your decision by submitting a TM01 form, which you can find on the Government’s websites.

Selling or keeping your shares

Unless your Shareholder’s Agreement specifies otherwise, you can choose whether you want to keep or sell your shares after you resign. This decision will likely be based on several factors. If you expect that the company will perform well, you might be eligible to receive dividends, or make a profit if the company is sold in the future. Your shares might also entitle you to vote on certain company matters, which you might be interested in.

If you keep your shares in the company, you might also not be able to establish or work for a competitor business.

In the case that you are undecided on whether you should keep the shares or not, you should read through your company’s legal documentation to get a full picture of what it would mean for your future to keep hold of the shares. You might also want to consult a professional for a second opinion.

What happens next?

From the date you officially leave the company, or the resignation date, you will no longer be an acting director. You will no longer have any responsibilities in the capacity as a director to the company, and will not be liable for any issues that arise after your resignation. On the other hand, you will no longer have a say in the day-to-day activities of the business, or have access to their bank accounts or records.


Can a director’s resignation be refused?

No. If you intend to resign, you cannot be forced to stay in the business. However, you will want to read through your company’s legal documentation before you hand in your resignation to ensure that your resignation does not breach contractual obligations, such as serving for a minimum amount of time.

Can you resign as a director if you are the only director?

Yes. You can resign from your role even if this would leave the company with no directors.

Can all the directors of a company resign?

Yes. It is possible for all the directors of a company to resign at the same time.

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