Appoint a director in place of deceased director

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In a private limited company, if a director from one shareholder group dies, the remaining group with a majority of shares (52% in this case) can appoint a replacement director. This can be done during an Extraordinary General Meeting (EGM) with the approval of the majority of shareholders, even if the other shareholder group (holding 48%) objects. While the majority shareholder group can pass resolutions, it's advisable to consult a corporate lawyer or Company Secretary for specific guidance, as shareholder agreements or external commercial relationships can influence the outcome.

DEBASISH BODHAK

DEBASISH BODHAK (Querist)

23 May 2021 In a Pvt Ltd Co there are 10 shareholders (2 of them are directors) holding 52% of shares (Group-A) and 6 shareholders (2 of them are directors) holding 48% of the shares (Group-B). One of the directors of Group-B died recently.
In this circumstances Group-A wants to appoint a director in please of the deceased director in EGM. Please tell me is it possible without the consent of Group-B?

Devershi Gupta

Devershi Gupta (Expert)

25 May 2021 After death of One Director (hailing from Group-B), Group -A holds majority in Board of Directors as well as shareholders. Thus, they can pass any board resolution and ordinary resolutions. Group-B may object and vote against such resolutions but they can not stop Group-A from passing the resolution.

As in the matter to TATA vs CYRUS MISTRY CASE

SC in its judgment upheld Tata Group's decision to remove Cyrus Pallonji Mistry as the Executive Chairman of Tata Sons, the Supreme Court has also held that minority shareholders do not automatically get a right to a seat on the board.

Note: In this case a shareholder agreement can play vital role or commercial relations of these groups outside this co. may also affect legal position of the Groups.

It would be my suggestion to consult a CS or Corporate Lawyer in this matter.
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DEBASISH BODHAK

DEBASISH BODHAK (Querist)

25 May 2021 Many thanks for your valued reply. Sir, I have done a mistake in my query that number of directors in Group-B were 3 and out of them one have deceased. Now Group-A and Group-B both have 2 directors and the problem is the same. So, please give your valued suggestion.

Devershi Gupta

Devershi Gupta (Expert)

26 May 2021 If Group -A and Group- B both have 2 directors in the Board, None of them have majority in the Board Meeting. So No group can pass any Board resolution without consent of the other.
But Since Group-A has majority shareholders, they can still appoint a Director in a general meeting.

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CS Divesh Goyal

CS Divesh Goyal (Expert)

20 July 2021 Directors in EGM can be appoint with approval of majority of shareholders. Therefore, Group A hold 52% shaares. they can appoint director.

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