24 May 2011
In my opinion, the Board must have appointed C & D as MD and WTD in Feb.2011 subject to the consent of the members at the General Meeting of the Company. Till the appointment of MD and WTD is confirmed by the shareholders in the ensuing AGM or EGM, whichever is earlier, they shall not be liable to retire by rotation.
At the ensuing AGM, the appointment of C & D as MD and WTD will be confirmed by the shareholders. Whether they will be liable to retire by rotation at the next annual general meeting can be determined, if so mentioned in the resolution pertaining to their appointment, contract entered into between the company on one part and MD and WTD on the other part or the provisions contained in the AOA of the Company.
As per the provisions of section 255 of the Companies Act, 1956, unless the AOA of a Company provides for the retirement by rotation of all the Directors at the AGM of the Company, not less than 2/3rd of the total number of directors shall be the one who shall be liable to retire by rotation. Hence, at the most a Company can have 1/3rd non-rotational directors.
In your case, there are 4 directors, so at least 2/3*4=3 Directors shall be liable to retire by rotation and only one Director can be non-rotational director.
In my opinion, u should keep the MD as non-rotational director.
This is my opinion and views/comment of experts are solicited....
CAclubindia
