Director liability


I am a director of a Indian private limited company with shareholder as foreign company with 60% share. I hold the share of 20% and another foreign director 20%. Our Authorised capital is 10 Lakhs in total and paid up capital is 1 lakhs.  Foreign company used to bill the local company for salary of Directors and other support staff involvment every month. Like that now the debt of local Company has gone to a considerable value.

What would be my liability if I decide to resign from the Director position and what would be status of my shares ? 


Practicing Lawyer

Under the Companies Act, 1956 the liability of a Director of a Company having share capital, unless otherwise stated in the Memorandum & Articles of Association, is limited to the extent of his/her share holding.

Yet all directors who at a given time are incharge of day to day affairs of the company are responsible to meet out all statutory obligations and andy demands raised on account of failure on their part, is recoverable under Land Revenue Act from those person, ir-respective of their holding in the company.



Thanks for the reply. Could you please elobarate on the meaning of extent of share holding? If company is under loss and it has debts, should the director have to pay for his share when he resigns? Say company has dept of 1 crore should the director pay 20Lakhs when he resigns or only the authorised capital or paid up capital.

Also please list out or provide me reference to statuatory obligation in India.

If the Director is a sole Indian director, what would be the implication if he or she resigns,






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