Appointment Director Placing Director Retiring Rotation Section 152(6)(e)
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Appointment of Director in Placing Director Retiring by Rotation under Section 152(6)(e) & Applicability of Section 160

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  Posted on November 5, 2021

Appointment of Director in Placing Director Retiring by Rotation under Section 152(6)(e) & Applicability of Section 160

Section 152 deals with the appointment and retirement of directors at the Annual General Meeting of the Public company. … At the annual general meeting at which a director retires, the company may fill up the vacancy by appointing the retiring director or some other person thereto.

The article here is discussing about two provisions namely section 152 and section 160 of the Companies Act 2013. Section 160 is analysed for understanding the eligibility and the conditions for submitting the special notice and secondly section 152(6) for understanding whether any person other than the retiring director are eligible to be appointed as director in place of retiring director. Section 152(6)(e) states that, at the annual general meeting at which a director retires as aforesaid, the Company may fill up the vacancy by appointing the retiring directors or some other person thereto.

Section 160 of Companies Act, 2013

Section 160 as per the bare act states that,

“(1) A person who is not a retiring director in terms of section 152 shall, subject to the provisions of this Act, be eligible for appointment to the office of a director at any general meeting, if he, or some member intending to propose him as a director, has, not less than fourteen days before the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as the case may be, the intention of such member to propose him as a candidate for that office, along with the deposit of one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the case may be, to the member, if the person proposed 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:

A director who is not a retiring director as per section 152 shall subject to the provisions of this Act, shall be eligible for appointment to the office of a director at any general meeting, if he or any other member intending to propose him as a director, has submitted a notice in writing under his hand signifying his candidature as director or as the case may be within not less than 14 days before the date of meeting, along with a deposit of INR 1 Lakh or such higher amount as may be prescribed. And such deposited amount shall be refunded to such person, who made the deposit or as the case maybe, to the member 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.

Provided that requirements of deposit of amount shall not apply in case of appointment of an independent director or a director recommended by the Nomination and Remuneration Committee, if any, constituted under section 178(1) or a director recommended by the Board of Directors of the Company, in the case of a company not required to constitute Nomination and Remuneration Committee.The company shall inform its members of the candidature of a person for the office of director in such manner as may be prescribed.

Section 152 of Companies Act, 2013

As per section 152(6)(a),unless the articles provide for the retirement of all directors at every annual general meeting, not less than two-thirds of the total number of  public company shall

(i) be persons whose period of office is liable to determination by retirement of directors by rotation; and

(ii) save as otherwise expressly provided in this Act, be appointed by the company in general meeting.

As per section 152(6)(e) at the annual general meeting at which a director retires as aforesaid, the company may fill up the vacancy by appointing the retiring director or some other person thereto.

Explanation—For the purposes of this sub-section, “total number of directors” shall not include independent directors, whether appointed under this Act or any other law for the time being in force, on the Board of a company.

Rotational directors are those directors whose period of office is liable to retire by rotation in every Annual General Meeting and eligible for reappointment accordance with the provision of section 152 of the Companies Act, 2013 Rotational directors are also known as retiring directors or temporary directors.

So, we can understand that, the company may fill up vacancy, by re-appointing the retiring director or some other person thereto. We can say that here, in place of a retiring director the company and its shareholders in its meeting either appoint the retiring director or some other person in the general meeting and the general body would be the final authority to decide who should be appointed.

In Compendium of “KEY ISSUES UNDER CORPORATE LAW (Volume 4) by DR. K.R Chandratre” mentioned on page no 22-16, Para II mentioned that:

“Section 152(6)(e) states that, at the annual general meeting at which a director retires as aforesaid, the Company may fill up the vacancy by appointing the retiring directors or some other person thereto. To fill the vacancy by appointing a person who is not a retiring director, the provision of Section 160 must be complied with”.

Hence, if the retiring director wishes to get re-appointed, then he shall serve his consent to be re-appointed as director with the company and such other member shall also make a proposal for such retiring director candidature to such directors’ office 14 days prior to the date of meeting (without failure) by depositing INR 1 Lakh or such amount as maybe prescribed and it shall be refunded in cases which were stipulated before.

 

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