APPOINTMENT AND
REAPPOINTMENT OF DIRECTORS
DR. ANITA SABLE
ASSISTANT PROFESSOR
APPOINTMENT OF DIRECTORS
Subscribers to By members in
memorandum general meeting
By board By third
of directors party
APPOINTMENT BY SUBSCRIBERS TO
Section 2(56)
MEMORANDUM name clause
Registered office
clause
First director Objects clause
Section 152(1) Liability clause
Capital clause
If no provision is given that how this appointment will be
done than we need to see the article of association
Regarding 1st director Internal
Subscribers to the MOA regulations and
bye-laws
Who are individual
Contain
Will be deemed to be the first regulations for
director until the director are duly appointed.management of
the company
FIRST DIRECTOR
SECTION 152(1)
No provision
AOA
Regarding first directors appointment
By subscribers to the MOA
Provided he to be individual
Will be deemed to be the first director until the directors are
duly appointed.
But in case of one person company
An individual being a member will be considered deemed
to be the first director.
Appointment of director in general meeting
section 152(2)to (7)
Person is proposed to be appointed as a director.
Furnish his DIN and declaration that he is not disqualified.
His consent must be obtain in writing in form DIR2.
The company shall file such consent with the (ROC)
registrar of the company in form DIR 12 within 30 days of
his appointment.
In case of appointment of an independent director
• Explanatory statement of notice calling the meeting.
• Shall also include the statement that in the opinion of the
board he fulfils the conditions of the section 149(6).
ANNUAL ROTATION SECTION 152(6)
Directors are liable to retire by rotation.
Unless Article of association provides for retirement of all the directors
by annual rotation.
If not only 1/3 can be given permanent appointment and the ret must be
liable to determination by rotation. These 2/3 directors are rotational
directors.
The rotational directors must have been appointed at general meeting.
Similar provision is applicable to public company.
Directors are liable to retire by rotation at every subsequent AGM.
1/3 of rotational directors shall retire at every AGM(rounded to nearest
one)
Order of retirement will be issued for who have been longest in office
since last appointment.
If appointed on same day by mutual agreement or by lot.
REAPPOINTMENT SECTION-152
Vacancy so created shall be filled in the same meeting
or may also resolve that the vacancies shall not be
filled up.
The AGM will be adjourn for next week same day,
same time and same place. Provided it is not a national
holiday.
After a week if no fresh appointment is made, nor a
resolution is passed against the appointment the
retiring directors shall be deemed to have been
reappointed.
Except-
If the appointment of a Unwillingness to
particular director was
put to vote, but the continue given by
resolution was lost retiring director
If special or ordinary
Disqualified or resolution is necessary for
incurred his appointment by virtue of
any of the aprovsions of the
disqualification act
Motion to appoint passed
without unanimous consent
being void under section
FRESH APPOINTMENT- SECTION 160
Fresh appointment in place of retiring one can be made.
Notice in writing for should be left at the office of the company at least 14
days before the date of the meeting along with a deposit of Rs 1,00,000 .
The amount shall be refundable one .
In case candidate get elected as director or gets more than 25 % of total
valid votes notice may be given by the proposed director himself or by
anyone intending to propose him.
Members may be informed by personal notice or by publication in two
local newspaper of which one must be in English and other in regional
language.
The notice must contain that where only two directors were retiring under
annual rotation , but the company received notices from three personal for
appointment and there fore company is appointing one more director.
APPOINTMENT BY NOMINATION
section 161(3)
Appointment through AOA without routed through the
company’s General meeting.
An agreement among the shareholders is imbibed in AOA to
that every holder of 10% shares shall have the right to
nominate a director.
Lending institutions some time have some of their nominees
in company board of directors for watching their interest.
This is also called as NOMINEE DIRECTOR
The board may appoint any person as a nominee director on
the bases of agreement or by CG by virtue of its
shareholding in a government company.
APPOINTING BY VOTING ON
INDIVIDUAL BASIS SECTION 162
All appointment of directors to be made by voting at
GM.
Wishes of shareholders in relation to be each proposed
direction should be obtained.
Two or more directors can not be appointed by single
resolution but if GM is so resolved more than one person
may be elected by the single resolution.
Elected director must submit his written consent to act as
director to the ROC within 30 days of his appointment.
APPOINTMENT BY PROPORTIONAL
REPRESENTATION SECTION 163
Appointment are one by Majority vs. Minority (election by
simple majority).
Section 163 enables the minority representation on the
board.
AOA may have a clause of proportional representation for
the appointment.
Proportional representation means by single transferable
vote or by a system of cumulative voting or otherwise.
Such appointment are made in every 3 years .
APPOINTMENT IN CASE OF CASUAL
VACANCIES
Casual vacancies are the result of vacating before
the expiry of director’s term.
Casual vacancies must be filled by procedure
prescribed in AOA or in absence of clause in AOA
by the directors to fill the vacancy in Board
meeting.
So newly appointed director would only be the
director till the expiry of the period for which the
outgoing director would have held office.
ADDITIONAL DIRECTORS SECTION
161
If AOA of provides Board can appoint additional
directors.
The appointed directors should not exceed the
maximum fixed by the articles.
In case the strength fell below the legal minimum
additional directors can be appointed by the remaining
directors.
These additional directors will hold the office till next
AGM.
Filing consent to act as director is not applicable.
APPOINTMENT BY BOARD
First method- Second method-
AOA may empower the Section 161 authorises
directors to appoint the directors to fill
additional directors casual vacancies.
considering the
maximum number
fixed therein.
APPOINTMENT BY TRIBUNAL
SECTION 242(J)
The directors can be appointed by the tribunal
for prevention of oppression and
mismanagement.
Any kind of agreement between the shareholders
not to increase the number of directors and the
capital of the company and
Not to do anything which is disturbing the
existing pattern of management is not binding on
the company.
Thank you
