Casual vacancy in private limited company

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This query is : Resolved

Amar (Querist)

08 May 2013 Dear All

I have a Query related to Casual Vacancy caused in Private Limited Company :

Facts are
1. Casual Vacancy Caused by Death of Director ( there were only two directors)
2. He was Promoter and Later on appointed as M.D. in General Meeting of the company.
3. As per AOA of company , Article for Causal Vacancy is as follow :

Subject to provision of Section 262 of the Act, Board shall have the power at any time and from time to time, to appoint any qualified person to be a Director to fill a casual Vacancy . Any person so appointed shall hold office only upto the date which the Director in whose place he is appointed would have held office if it had not been vacated by him.

Further as per AOA :

QUORUM :

The Quorum for the meeting of the Board shall be one Third of its total Strength or two Director, which ever is higher..

4. As per Section 262 :

262. Filling of casual vacancies among directors. (1) In the case of a public company or a private company which is a subsidiary of a public company, if the office of any director appointed by the company in general meeting is vacated before his term of office will expire in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the company, be filled by the Board of directors at a meeting of the Board.

(2) Any person so appointed shall hold office only up to the date up to which the director in whose place he is appointed would have held office if it had not been vacated as aforesaid.

and

(3) Casual vacancy in private company

Section 262 applies to only public companies and private companies which are subsidiaries of public companies. This, however, does not mean that a private company which is not a subsidiary of a public company is debarred from vesting in its Board, by articles, the power to fill casual vacancies among its directors. Such a company can by its articles vest in its Board that power without any of the limitations imposed by section 262.

Now my Question is

1. Casual Vacancy is caused by Director who was promoter and subscriber to MOA . In that case his appointment was consider be held in Board Meeting or in General Meeting...?? ( As per section 262, C. V. caused by death of Director who was appointed in General Meeting , can be filled in Board Meeting.)

2. Is that possible to appoint any qualified person as Director in absence of Quorum in Board Meeting. ( which is required to be hold proper Board Meeting.)

or Is any other Option or Alternate is available in such situation ???

Ajay Mishra

Ajay Mishra (Expert)

08 May 2013 Hi

I will suggest you to appoint a director in casual vacancy as per your Companies, Articles.

The provision of section 262 is not applicable to private limited company.

Amar

Amar (Querist)

08 May 2013 Pls reply my Query No.2 regarding Quorum in Board Meeting.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

18 July 2024 Based on the information provided and the relevant provisions of the Companies Act, 2013, let's address your queries regarding the casual vacancy caused by the death of a director in a private limited company:

1. **Appointment of New Director:**

- The appointment to fill the casual vacancy caused by the death of a director, who was a promoter and subscriber to the Memorandum of Association (MOA), would typically be governed by the Articles of Association (AOA) of the company.
- Since the deceased director was appointed as Managing Director (M.D.) in a general meeting of the company, the provisions of Section 262 of the Companies Act, 2013, would not strictly apply because Section 262 primarily deals with casual vacancies in public companies or private companies which are subsidiaries of public companies.
- In a private limited company like yours, which is not a subsidiary of a public company, the AOA would generally have provisions allowing the Board to appoint a new director to fill the casual vacancy. The appointment would typically be made by the Board of Directors in a Board Meeting, unless the AOA explicitly states that such appointments must be made in a General Meeting.

2. **Quorum for Board Meetings:**

- According to the AOA you mentioned, the quorum for a Board meeting is one-third of its total strength or two directors, whichever is higher.
- If the current Board strength after the death of the director allows for the meeting to achieve quorum with the remaining directors, then the Board can proceed to appoint a new director to fill the vacancy.
- If the existing directors do not meet the quorum requirement as per the AOA, then the Board meeting cannot be held and decisions including the appointment of a new director cannot be legally made.
- In such cases, it would be necessary to convene a general meeting of the company to appoint the new director. This would involve following the procedures laid down in the Companies Act, 2013, and the AOA regarding the convening of a general meeting, giving proper notice, and obtaining the requisite majority for the appointment.

**Key Points to Consider:**

- **Article Provisions:** Review the specific provisions in the AOA regarding the appointment of directors and filling of casual vacancies. These provisions will govern the process and eligibility criteria for appointing a new director.

- **Compliance:** Ensure compliance with the Companies Act, 2013, and the AOA of the company regarding the process for appointment of directors and convening of meetings.

- **Legal Advice:** It is advisable to seek legal advice from a company secretary or legal professional familiar with corporate governance and the Companies Act to ensure all procedures are followed correctly.

In summary, while the appointment to fill the casual vacancy caused by the death of a director in your private limited company can typically be done by the Board of Directors in a Board Meeting as per the AOA, the quorum requirement must be met. If the quorum is not met, convening a general meeting may be necessary to appoint the new director.

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