Nominee Directors

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Arijit (Querist)
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06 October 2010 What is the procedure to appoint a nominee director in a public limited company?
(Here the nominee is a govt of India's employee & GOI has asked the Company to appoint him as a nominee director in the said company, due to the fact that there is a JV b/w the company and the Govt.)

Also want to ask that - Is consent u/s 264 reqd? or is any other consent reqd?

Also what will be the attachments in e-form-32 other than the Board resolution?

Ajay Mishra

Ajay Mishra (Expert)
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06 October 2010 Dear Friend

Nominee Director
The article of association of many companies provide that financial institutions and banks which lend money or other financial assistance to the company shall have the right to nominate one or more directors on the Board of the company. These are called nominee directors.
The appointment of nominee director shall take effect depending on the provisions in the articles of association of the company concerned. Generally if the nominee are appointed by the SBI, LIC nationalized bank, the nominee take effect from the communication nominating the director received from the respective institutions and banks or the date mentioned in the letter of nomination whichever is earlier. Formal acceptance of the nomination by the Board is not necessary to give effect to such appointment. British Murac Syndicate V. Alperton Rubber co. (1915).
However, if the power to appoint nominee director is exercised by other institution/bank, the Board of Directors of the assisted company have to co-opt the nominee director in the Board Meeting or by passing a circular resolution. Thus such appointment take effect from the date of resolution co-opting him on the Board.
A nominee director has to file consent for acting as director of a public company and Form 32 will be filed with ROC within 30 days from the date of appointment.
Consent letter should be attached in Form 32 for appointment of Nominee Director.
Regards

Ankur Garg

Ankur Garg (Expert)
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06 October 2010 Hi,

There is no specific procedure for Nominee director. Simply appoint him as an additional director and file form 32 within 30 days of appointment in the board meeting.

Attach consent letter with form 32 along with letter received from govt of India.

Also check your articles.

Thanks

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