What is a director resignation letter? (With template)
There are many reasons a director may choose to leave the company they manage, including retirement, new career opportunities or internal differences of opinion. A resignation can impact how the company functions, so it's important that a director raises these matters when they submit their notice. There's also a requirement to submit official paperwork to ensure a smooth resignation, and learning more about this process can help you efficiently leave a role. In this article, we discuss what a director resignation letter is, show you how to write one and provide a template you may reference when writing your document.
What is a director resignation letter?
As a director, if you want to leave the company that you're a part of, it's important for you to draft a director resignation letter. This is an official document that includes your date of resignation, the reason for leaving and your signature. When the company receives the resignation letter, your duties as a director cease. In some cases, companies might also look for confirmation of the resignation. This might include confirming that you have returned all your entitlements, such as a company car, and that you release any claims made against the company.
How to write a letter resigning from a director role
There are a few preliminary steps to take if you intend to resign as director of a company. Below is an outline of these steps and what to consider when writing your letter of resignation:
1. Check your service contract
Your director service contract provides information about your role as director and might include an outline of the resignation procedure for the company. This may include required notice periods or specific protocols to follow. If you find no information there, it might be worthwhile to check the company's articles of association or the shareholder's agreement for any provisions regarding director resignations. Sometimes, the resignation may require board approval. It's important to ensure you comply with any requirements in the company, so take time to research this information before writing your letter.
2. Draft your resignation letter
If the company you work for requires a specific template or process, ensure you use that. You can draft your own resignation letter or use a template if there's no clear guidance regarding resignation as a director. Include all the key details, such as the date you intend to resign and your signature. Find out where and how to send the letter to ensure it successfully arrives. Some companies prefer resignation letters sent to their registered office address by recorded delivery.
3. Discuss any additional matters with the company
In some cases, the company may discuss matters that potentially impact the company following your resignation. Some of these concerns might include whether you're a shareholder in the company or owe any outstanding payments for loans. You might also have outstanding payments from the company to finalise.
Related: How to write a resignation letter
Tips for writing a letter of resignation as a director
Here are some additional tips to help you write your letter:
Address the company rather than an individual
In most types of resignation letters, you can address the resignation to a specific company member, such as a manager. As a director, it's better to address the resignation to the company rather than an individual. In some instances, it may be acceptable to address another director or the board of directors.
Convey your intention to resign
It's important to let the business know that you intend to resign, but giving every detail is unnecessary. Keep it brief and focus solely on your intention to leave. You might clarify why you're leaving to avoid speculation about your resignation but this isn't essential. As this is a professional document, remember to keep it positive in tone. Your resignation letter is an opportunity to highlight the achievements of the business and thank your colleagues while still focusing on the key points. The best way to structure your resignation letter is to keep it concise and professional.
Include your date of resignation
One of the most crucial details to include in your resignation letter is the date you wish to resign. It's beneficial for the company to know when you intend to leave and allow them to plan. This is especially true if you're the sole director because it's a legal requirement for the company to appoint a new director by your departure date.
Giving a precise date of resignation and notice period is essential for the smooth transition of responsibilities in the business. This gives the company time to process the situation, finalise any handovers before you leave and implement plans for potential successors. It's important to examine any legal documentation like contracts or articles of association to determine if you have a specific notice period. If you're unsure, it's a good idea to discuss your resignation letter with the remaining directors or leaders in the business to ensure they've received it.
Keep it professional and brief but personal
Although your resignation letter is an official document, completely following a rigid format is unnecessary. Your resignation has the potential to leave a lasting impact on the company, so you can thank the business for what you've learned or experienced while there. You might also want to mention that you enjoyed your time at the company and thank your colleagues. Just keep it brief and mention the key points.
Related: 9 Essential Director Skills
Director resignation letter template
Below is a template that you can use for your director resignation letter:
[Address of the business]
[Date of the letter]
To [company]/[or another director],
I am writing this letter to announce my resignation from the position of director at [company] due to [reasons such as health, retirement or new career opportunities]. My notice period is [x weeks], which makes my final working day [date of departure].
I would like to thank all my colleagues who have grown alongside me during my time at [company], and I wish you all the best in your future endeavours. I am more than happy to help with the appointment of my successor and wish the company the best for the future. Please confirm both the receipt of this letter and my final working date as a director of [company].
Thank you again and warm regards,
FAQs about resigning as a director
Here are the answers to a few additional questions you might have when resigning as a director:
What does a company do when a director resigns?
Because of the seniority of the role, companies often require directors to give a notice period of at least three months. In some cases, the notice period might run until the company finds a suitable replacement for the position. When a director leaves a company, it can cause several changes that impact the organisation, so lengthier notice periods are an effective way to minimise these effects. Many companies have a succession plan for directors if one decides to leave. There are a few questions for the company to consider when a director resigns, including:
Can existing staff cover the extra responsibilities, or is a replacement required immediately?
Is there a leaving agreement?
Does the director leave the company immediately or go on garden leave?
Is it necessary for the shareholders to know about the resignation immediately?
When will they tell the bank, staff, clients and suppliers about the resignation?
There are a few other legal aspects that could affect a director's resignation. It's essential that the company updates its statutory registers and informs liability insurers of the resignation. As of 2022, according to the Companies Act 2006, it's necessary for the company to hire a replacement with immediate effect if the individual who is resigning is the sole director of the company.
Who is responsible for submitting the TM01 form to Companies House?
The company is responsible for updating Companies House about the director's resignation by filling in a TM01 form, which is the form to terminate the appointment of a director. The company also updates the statutory registers to document the resignation, which includes updating:
the register of directors
the register of director's residential addresses
the register of shareholders if the director sells their shares upon resignation