How do I write a director's resignation letter?

When making the tough decision to step down from a directing position in a company, it is recommended you write a letter of resignation. This is a formal document and will usually address important points that help your company prepare for change without conflict. Making sure you complete the following steps will ease the transition of your departure and help maintain healthy relationships in the organisation. This?Legal Kitz?blog will be discussing what a director’s resignation letter looks like and will provide key recommendations for drafting a letter of your own.

What is a director’s resignation letter??

A director’s resignation letter is a formal statement that declares your intentions to step down from a leadership position of a board, company or other organisation. The letter should include some key details, such as your reasoning for stepping down and the final date of your service. It can also contain some statements from you, as a thanks to the company and some well wishes for future business endeavours.

After you resign, the?Australian Securities and Investment Commission (ASIC)?will need notification within 28 days of your last day of service, from your company. This notification can be also supported by your completion of?Form 370?and an attached copy of your resignation letter. These processes with the ASIC should be completed so that necessary changes can be made to keep up-to-date records of the organisation.?

What should I include in my director’s resignation letter?

Before you begin to worry if you are doing the right thing, please remember that there is no specified format for a resignation letter. The main thing you should try to do is be clear about when and what you are doing. The rest is completely up to you, but we are going to list some important things to address so that your resignation occurs as smooth as possible!

Should I acknowledge the obligations that I am letting go of?

Writing an effective resignation letter may involve providing confirmation. When a director no longer acts in their role, most of the duties that they were bound by will consequently end. When writing your letter, providing confirmation is just confirming that you know these duties will end.?

This is an acknowledgement that your entitlements return to the company and that you release any claims against the company which arose in a director’s position. You may also clearly state some of the duties that you are releasing or you may acknowledge that you no longer qualify for listed benefits.

?Also make sure to be clear, stating that the letter itself is an official release of your director obligations so that your resignation is obviously communicated. Please note that as a former director, you can still be liable for your actions when you were a director.?

The role of a director comes with important legal ramifications so you might want to separately address any potential legal challenges. You may ask a lawyer to review this. Overall,?these paragraphs are just you communicating that you don’t act for the company anymore, and that you will not hold any of the benefits or entitlements that came with your prior role.

If you choose to, you can alternatively extend an offer to help with the transition by recruiting or training a replacement. Being a former director, it may be hard to let go of a company you have played a key role in and therefore, inviting the organisation to contact you in the future by providing relevant contact information can be a nice way of adjusting to the change.

Should I say why I am stepping down?

It is a good idea to be honest and communicate why you are leaving your role of director. Your reasons for leaving should be communicated without ill intentions and you may express gratitude for the opportunities you were given. You may express things that you learnt or things you hope for the next chapter of the company. This should be personalised and suit the nature of your company which you know best. Doing this may also stop any rumours or conflict spreading in the company, and allow anyone affected to move on with the business.

What about my formatting?

As it is a formal document, you should include standard formatting such as your name, prior position, contact details and date. Make sure your resignation is communicated clearly in plain English, and that the document is accessible to your employees or that they are notified appropriately by the board. Use clear paragraphs and bold important points if you feel it is necessary.

Expressing your resignation in an clear, open and understandable way will show cooperation with continuing members of the company, and will allow them time to find a replacement before your final day. Ensuring a common understanding of the changes to come protects the business’s ongoing operations and reduces stress for those working to fill your position or adapt to greater workloads.

Legal advice?

Writing a director’s resignation letter is an important step in the resignation process. This works alongside any set processes that your company has outlined in their policies and procedures. These processes should also include updating the officeholder information under the ASIC.

When writing a resignation letter, make sure you use clear communication so that the company is able to prepare and adjust to core leadership changes and the distribution of workloads. Given you may have been a key character shaping business attitudes, focusses and decisions, it is appropriate to address your leave without ill intentions and with thankfulness. Whether you choose to offer help to the business or not after your resignation, you should at least give them a date to prepare for so that both your and your company can move forward smoothly.?

If you require assistance drafting a resignation letter or need guidance around the process of resigning, you should seek legal advice.?Legal Kitz?can ensure that you achieve these steps without trouble with the?ASIC?or your former company! Click?here?to book a FREE consultation with one of our highly experienced solicitors today, or contact us at [email protected] or by calling 1300 988 954.