Section 203A — the proposed resignation process for whole-time KMPs

The Corporate Laws (Amendment) Bill, 2026 proposes to insert a new Section 203A into the Companies Act, 2013, formalising the resignation process for whole-time Key Managerial Personnel who are not directors — principally the Company Secretary, the Chief Financial Officer and the Manager. The provision is not yet law: the Bill is at draft / consultation stage and Section 203A takes effect only if and when the Bill is enacted and the section is brought into force by notification. What follows is written against the draft text as introduced.

Until this insertion, the resignation of a whole-time KMP is governed by the contract of employment and by whatever process the board chooses to follow. The proposed Section 203A gives the process a statutory shape that mirrors the director-resignation regime under Section 168 of the Companies Act, 2013.

In broad terms, the draft section requires the resigning KMP to send a written notice of resignation to the company. The company is then required to take note of the resignation at a board meeting, place the fact in the Directors' Report of the financial year in which the resignation takes effect, and intimate the Registrar within the prescribed time in the prescribed form.

The provision addresses a real gap. A Company Secretary who resigns under the current framework is in an awkward position on the record: the fact of the resignation would appear in the AOC-4 attachments and the Directors' Report, but there is no direct filing on the MCA register tied to the individual's cessation. Section 203A, if enacted, closes that gap and puts KMP cessation on the same evidentiary footing as director cessation under DIR-12.

For the outgoing KMP, three things follow — and these are already good practice under the existing regime, regardless of the Bill. First, the notice of resignation should be a dated, written communication addressed to the company, not to an individual director. Second, the effective date of resignation is the date agreed with the board (or, in the absence of an agreed date, the date the notice period runs out) — and that date should be recorded in the board minutes taking note of the resignation. Third, the handover — statutory registers, digital signatures, portal credentials, any board or committee papers held by the KMP — should be documented as a schedule to the resignation, so that the successor is not left reconstructing the file.

For the company, the practical steps are: convene a board meeting (or record the item at the next board meeting) to take note of the resignation, ensure any intimation required by the Registrar is filed within the prescribed timeline, and update the internal statutory registers and the disclosure schedule. If the outgoing KMP is a Company Secretary, the appointment of a successor is a separate compliance step under Section 203 and should be sequenced so that the company is not without a KMP for longer than the Act permits.

Section 203A will not create a new ground of dispute — an ordinary resignation on notice remains an ordinary resignation. What it will do, once notified, is make the process of exit legible on the public record, which is useful for the outgoing KMP (for future engagements) and for the company (for future filings, due diligence exercises, and inspections). Boards should track the Bill's progress and update the internal exit-management checklist for KMPs so that the process is ready to switch across cleanly on the date the section is brought into force.