Additional director

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amitbhatt89

amitbhatt89 (Querist)
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02 September 2013 Definition of additional director and need of him?

Ajay Mishra

Ajay Mishra (Expert)
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02 September 2013 Hi

The Companies Act, 1956 has not defined additional director.

Appointment of additional directors:

Additional Director is appointed under section 260 of the Companies Act, 1956.

Additional Directors are appointed by the Board between the two annual general meetings subject to the provisions of the Articles of Association of a company. Additional directors shall hold office only up to the date of the next annual general meeting of the company. Number of the directors and additional directors together shall not exceed the maximum strength fixed for the Board by the Articles.

Where the Articles so authorise, the Board can appoint additional directors, if by such appointment, the total strength of the Board is within the limit fixed by the Articles. The appointment may be made at a Board meeting or by a circular resolution.

Tenure of additional director

The person so appointed can act as an additional director up to the date of next annual general meeting. This provision is not meant to enable the company to keep on its Board a person as additional director for an indefinite period of time by not holding the annual general meeting. Section 260, therefore, must necessarily be read with section 166 which stipulates that the annual general meeting be held every year and not more than 15 months shall elapse between the date of one AGM and the next. [P. Natarajan v Central Government (2004) 60 CLA 274 (Mad)].
It is open to the Board of directors to appoint additional director if power has been conferred on the Board by the Articles of Association, irrespective of the provisions of section 255, 258, & 259 of the Companies Act. The additional director so co-opted shall hold office only upto the date of the next AGM. The co-option of an additional director in terms of the first proviso to section 260 ceases unless re-appointed on the last day of the next AGM that should have been held. The word 'shall hold office only upto the date of next AGM' mean that such director shall hold office upto the last date on which the next AGM should have been held and not the actual holding of that meeting if it is beyond the statutory period for holding of such meeting. [Dushyant D. Anjaria v Wall Street Finance Ltd. (2001) 105 Comp Cas 655 (Bom)].

Ajay Mishra

Ajay Mishra (Expert)
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02 September 2013
Procedure for Appointment of Additional Directors.

1. Take consent of director and DIN/disclosure of interest
2. Call a Board Meeting for proposal of appointment of director
3. Hold a Board Meeting and appoint him as additional director.
4. File Form-32, with ROC, with in 30 days from the date of appointment.
5. Attach consent letter with Form-32, in case of public limited company.
6. Take entry in Minutes.

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