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Posted on November 22, 2021
Appointment Of Director In The Place Of Director Retiring By Rotation Under Section 152(6)(e) And The Relevance of Section 160
The write-up given here on the above topic is talking about two provisions namely section 152 and section 160 of the Companies Act 2013.
The Section 160 is examined for understanding the eligibility and the conditions for submitting the special notice. While section 152(6) has been analysed and elaborated for understanding whether any person other than the retiring director are eligible to be appointed as director in place of retiring director.
Section 160 of Companies Act, 2013
As per the provisions of Section 160 of Companies Act it has been stated that,
In case of a person or director who is not a retiring director in terms of section 152 shall, pertaining to the provisions of the Companies Act, be held eligible for being nominated and appointed to the office of a director. And this shall be done at a general meeting if he, or some member intending to propose him as a director, leaves a notice with the registered office of company, atleast 14 days prior to meeting in writing under his hand signifying his candidature as a director or, as the case may be or the implication of the aim which was held by a member to propose the person as a candidate for that office, along with the deposit of INR 1 Lakh or such higher amount which has been prescribed. It should also be noted that such amount shall be refunded to such person or, as the case may be, to the member, provided that the person proposed in the notice gets elected as a director or gets more than twenty-five per cent of total valid votes cast either on show of hands or on poll on such resolution.
Elaborating the same we can understand that:
- Taking a case of a person or a director who is not retiring as per the provisions of section 152 shall subjecting to the provisions of this Act, be eligible for being appointed to the office of a director at any general meeting.
- And for this he or any other member intending to propose him as a director, has to submita notice in writing under his hand with the company.
- This notice should signify his candidature as director or as the case may be by the member.
- And should be submitted within not less than 14 days before the date of meeting.
- The notice shall be submitted along with a deposit of INR 1 Lakh or such higher amount as may be prescribed.
- The deposited amount shall be refunded to such person, who made the deposit say the director or the member who proposed as the case maybe, if such proposed candidate gets elected as a director or gets more than 25% of the total valid votes cast either on show of hands or on poll on the resolution to be passed.
It has also been provided that the deposit amount requirement shall not apply in the following cases:
- In case if the company is having a Nomination and Remuneration Committee constituted as per section 178(1) of the Companies Act, then the appointment of an independent director or a director recommended by such Nomination and Remuneration Committee, then deposit shall not be required.
- In case the company is not having Nomination and Remuneration Committee formed as per section 178(1) of the Companies Act, director recommended by the Board of Directors of the Company then also the deposit amount shall not be required.
The company shall also inform its members regarding the candidature of a person for the office of director in such manner as may be prescribed.
Section 152 of Companies Act, 2013
The section 152(6)(a) of Companies Act has stated that, unless the articles of the company provide for the retirement of all directors at every annual general meeting, a ratio of directors which is not less than two-thirds of the total number of directors of a public company shall:
(i) be taken for the determination of retirement of directors by rotation, of the persons whose period of office is liable for the same; and
(ii) it has also been expressly provided in this Companies Act, that they shall be appointed by the company in general meeting held by the company.
As per section 152(6)(e) of the Companies Act, it has been stated that at the annual general meeting at which a director retires in the aforementioned manner, the company may fill up the opening by appointing the retiring director or some other person thereto or into such position.
As per this sub-section, it should be noted that, the usage “total number of directors” shall not include any independent directors, whether appointed under this Companies Act or any other law for the time being in force, and is applicable on the Board of a company.
So, we can understand now that, the company may fill up the available opening, by re-appointing the retiring director or some other qualified person thereto. We can say that here, in place of a retiring director the company and its shareholders in its meeting may either appoint the retiring director or some other person and it will the general body which would hold the final authority to decide who should be appointed in such position.