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CS Executive · Company Law and Practice · Directors

Mr. Vikram Shah resigned as a director of Orion Steels Pvt Ltd in April. In May, an offence committed in the company in the previous January, when he was a director, came to light. What is his position under section 168?

He remains liable. The proviso to section 168(2) says a director who has resigned stays liable after resignation for offences which occurred during his tenure. Since the offence occurred in January while he was a director, his later resignation does not remove that liability.

  1. AHe is not liable because his resignation has taken effect
  2. BHe is liable only if the Board takes note of the offence
  3. CHe is liable only if his resignation was not intimated to the Registrar
  4. DHe remains liable for the offence, as it occurred during his tenureCorrect

Explanation

The proviso to section 168(2) states that a director who has resigned remains liable even after resignation for offences which occurred during his tenure. The January offence falls in his tenure, so resignation does not remove liability. The claim of non-liability wrongly treats resignation as retrospective release.

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