Resigning as a director

Considering resigning from your role as a company director can be a significant and difficult decision.

Under English law, a director can resign by giving written notice to the company, typically by letter or email. No special form or board approval is needed unless the company’s articles say otherwise. It's good practice to file the resignation promptly with Companies House using Form TM01.

What to consider before resigning as a director

• Personal Guarantees -  if you have given a personal guarantee for company borrowing and this is not cancelled by the lender, it will remain enforceable against you even after resignation

• Conflicts of Interest - even after resigning, directors must not exploit opportunities they became aware of while in office and must avoid conflicts of interest arising from their former role.

• Insolvency Risks - heightened personal risk if you resign when the company is in financial difficulty. Directors who resign shortly before insolvency can still be investigated. Liquidators can look back at your conduct for up to 3 years. Resignation won't protect you from wrongful trading claims if problems existed during your tenure.

• Post-termination restrictions - review your service agreement for restrictive covenants (non-compete, non-solicitation clauses). These restrictions typically remain enforceable after resignation. Consider negotiating about these terms as part of your departure. Breach of restrictions can lead to injunctions or damages claims.

• Leaver clauses - bad leaver provisions may force you to sell shares at less than market value. Check shareholders' agreement for specific resignation consequences. Consider timing of resignation in relation to vesting schedules and understand dividend rights post-resignation.

• Indemnities and insurance - review existing indemnities from the company, consider negotiating a specific resignation indemnity and check if your D&O insurance covers claims made after resignation

Practical steps to protect yourself

• Get Legal Advice

• Review Key Documents - service agreement, shareholders' agreement, articles of association and any D&O insurance policy

• Document any concerns - record any issues that led to your resignation, especially financial or ethical concerns

• Formal Written Notice - submit a clear, dated resignation letter

• Board Minutes - ensure your concerns are properly recorded

• Companies House Filing - confirm your resignation is properly registered (TM01 form)

• Handover - document the status of your responsibilities and projects

• Keep Records - maintain copies of all company documents for at least 6 years

• Insurance - consider purchasing run-off cover if possible

• Monitor - stay aware of the company's status, especially regarding insolvency

• Respond Promptly -  act quickly if contacted by liquidators or administrators

How we can help

Our firm specialises in advising directors on exits from companies. We can:

• Review your position and identify specific risks

• Negotiate better resignation terms, including indemnities

• Advise on timing to minimise share-related penalties

• Help you document concerns to protect against future claims

• Represent you if claims arise post-resignation

Contact us for a confidential discussion about your situation.