Directors Requirement as per Companies Act, 2013 – Part 2
Introduction: In previous article we discussed who are the directors that are liable to retire by rotation and who are the directors that will retire; In this article we will cover re-appointment of retiring directors and what are the other relevant provision relating to directors.
Reappointment of Retiring Directors:
Whether retiring director can be re-appointed?
Yes, director which is retiring in compliance to section 152(6) and 152(7) of companies act, 2013 can be re-appointed in Annual General Meeting by passing ordinary resolution.
Can company appoint any other person instead of retiring director?
Yes, company may also appoint any other person as director instead of retiring director, for this company is required to pass an ordinary resolution from its shareholders,
Can company keep the vacancy; i.e. by not appointing any person in place of retiring directors?
Yes, company can keep the vacancy unfilled also; but it shall be noted that after the retirement of director number of directors shall not fall less than the requirement of minimum number of directors.
What if Annual General Meeting where such directors where liable to be retire is not conducted?
In case if Annual General Meeting is not conducted then, directors who are liable to retire by rotational have to vacant their office on date on which annual general meeting was required to be held.
Illustration: D & Company Pvt. Ltd. is statutorily required to hold Annual General Meeting on or before 30th August, 2020; Mr. Ramesh and Mr. Suresh are the directors that liable to be retire by rotation as per the provision of section 152(7) of companies act, 2013. They along with other directors did not conducted Annual General Meeting on or before 30th August, 2020 in view that they can be part of company. Whether the contention of directors is valid?
In above case contention of director that they will not be liable to be retire as they have notconducted Annual General Meeting is not correct and they will e liable to vacant their office on date on which annual general meeting was required to be held. i.e. from 1st October, 2020.
What if meeting is Adjourned and still vacancy of retiring director is not filled up?
In case meeting is adjourned and vacancy of the retiring director is not filled up that in that case directors can continue till conduct of adjourned meeting. But this be noted that meeting has not expressly resolved not to fill the vacancy; if meeting resolves such, then in that case directors will be liable to retire and will be required to vacant their office.
What if in adjourned meeting also vacancy of retiring director is not filled up?
In case meeting is adjourned and vacancy of the retiring director is not filled up that in that case directors are deemed to be re-appointed. But this be noted that meeting has not expressly resolved not to fill the vacancy; if meeting resolves such, then in that case directors will be liable to retire and will be required to vacant their office.
Proposing himself or other personfor appointment as director
In case if any person who is willing to be appointed as director or wants to propose the name of any person to be appointed as director than in that case then he is required to follow following steps;
1. Person will be required to serve notice to company at least 14 days prior to annual general meeting of his intention to be appointed as director or proposing name of any person to be appointed as director. This notice will be signed by the person who is proposing his name for appointment as director; therefore, this can be treated as written consent to act as director; otherwise person can also give it separately.
2. Person will also be required to deposit Rs. 1,00,000/-. In case if company in which he is proposing his name to be appointed as director is registered as Nidhi company than in that case amount of deposit shall be reduced to 10,000/-
However, there is exception to this rule, if person is willing to be appointed as Independent director, or person name has been recommended by the Nomination and Remuneration Committee or in case the name has been recommended by Board of Directors of Company where there is no nomination and remuneration committee.
Whether this deposit is refundable?
Deposit will be refunded to person only in case 25% of total members who are present and who has voted meeting are in favor of his appointment. However, in case if company is registered as not for profit organization i.e. under section 8 of companies act, 2013 then in that case it will be up to board of director that whether they want to refund the deposit or not.