We received a query multiple time – how to plan retirement from directorship? Certainly, they are not asking me about post-retirement financial planning. This question particularly concerns professional directors, employee director, or independent directors concerned. This is not easy to plan a retirement which might have legal consequences up to the next 8 years. Moreover, retirement as directors is not one time exercise but a continuous one. It starts with your joining as director.
We will discuss it very briefly as long answers may not suits requirement a director except asked a particular aspect in detail.
DUE DILIGENCE OF YOUR DIRECTORSHIP
How many companies you are or were directors, check official record.
What? One person asked. But it is my experience. Some times as an employee or promoter director you give consent in many companies and forgot to track.
- Director Master Data; and
- Director details
These data will provide you with information about your past and present directorships. This should be a periodic exercise at least annually.
Prosecution as Director with MCA
Periodically we should check out details for prosecutions launched by MCA. This is the most crucial thing to check.
In case of a listed company or a company regulated by a market regulator – RBI, IRDIA, etc, ensure there is no prosecution against you by these regulators.
Please check your appointment with your companies under various laws like occupier under labour laws.
ANNUAL Reports and Annual Returns
I will advise having copies of all Annual Reports containing – Notice of AGM, Board’s Report, Auditor’s Report, Balance Sheet, and other annexures for all years for which you were a director in a company. If possible one may have such data for two-three years prior to appointment as well as post-cessation from directorship.
Annual Returns for all these years are more important. Please check it carefully for following dates and your attendance or absents:
- Date of AGMs
- Date of EGMs
- Date of Board Meetings;
- Dates of all resolution by Circulars; and
- Dates of all committee meetings in which you were part.
In case your presence or absence is wrongly marked, please have proof in support of your claim and protest the wrongly filed information.
MINUTES OF MEETINGS
Every Director should have copies of minutes of AMG, EGM, board meetings and committee meetings. Even after ceasing from directorship, you may ask such minutes for the period of your directorship. However, it is prudent to seek copies of such minutes before cessation.
This will help you to have all the required information in case of any trouble like the prosecution is launched against you.
BLOCKING YOUR DIN
Most of the directors want to surrender their DIN post-retirement. It is not legally possible.
A DIN can be surrendered only if it is not used at all. Form DIR-5 which facilitate the surrender of DIN require a declaration that he has never been appointed as a director in any company and the said DIN has never been used for filing of any document with any authority.
You may also not apply for blocking off your DIN. This is a trick. Do not file Form DIR-3-KYC post your retirement. You may also opt not to file Form DIR-3-KYC in case you are on a long break after your last assignment as director.
Wherever you want to reconsider your retirement or long professional break, you may get your DIN activated by just filing Form DIR-3-KYC. Yes, this will cost you Rs. 5,000/- as a fee.
However, it will save you from unwarranted appointment as director.
- Aishwarya Mohan Gahrana
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