Section 152 (6) of companies act 2013- unable to understand

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Kumar Gaurav (Querist)
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29 June 2015 Dear Experts

I am unable to understand section 152 (6) of companies act 2013 regarding retirement of directors by rotation, can you please help me to understanding the crux of following matter with an example.

(6) (a) Unless the articles provide for the retirement of all directors at every annual
general meeting, not less than two-thirds of the total number of directors of a public company
shall—
(i) be persons whose period of office is liable to determination by retirement of
directors by rotation; and
(ii) save as otherwise expressly provided in this Act, be appointed by the
company in general meeting.
(b) The remaining directors in the case of any such company shall, in default of, and
subject to any regulations in the articles of the company, also be appointed by the company
in general meeting.
(c) At the first annual general meeting of a public company held next after the date of
the general meeting at which the first directors are appointed in accordance with clauses (a)
and (b) and at every subsequent annual general meeting, one-third of such of the directors
for the time being as are liable to retire by rotation, or if their number is neither three nor a
multiple of three, then, the number nearest to one-third, shall retire from office.
(d) The directors to retire by rotation at every annual general meeting shall be those
who have been longest in office since their last appointment, but as between persons who became directors on the same day, those who are to retire shall, in default of and subject to
any agreement among themselves, be determined by lot.

e) At the annual general meeting at which a director retires as aforesaid, the company
may fill up the vacancy by appointing the retiring director or some other person thereto.
Explanation.—For the purposes of this sub-section, “total number of directors” shall

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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23 July 2025 Sure! Let's break down Section 152(6) of the Companies Act, 2013 related to retirement of directors by rotation. This section primarily deals with the structure and rotation of directors in a public company and lays down guidelines for their appointment and retirement. Here’s a detailed, step-by-step explanation of each clause in the section.

Section 152(6) Explained:
(a) Two-Thirds of Directors Must Be Liable to Retirement by Rotation:
"Unless the Articles provide for the retirement of all directors at every AGM":

This means that not all directors are automatically required to retire by rotation unless specified in the Articles of Association of the company. If the Articles say otherwise, the provisions of Section 152(6) don’t apply.

"Not less than two-thirds of the total number of directors of a public company shall—":

For a public company, at least two-thirds of its directors must have their term of office liable to retirement by rotation.

"be persons whose period of office is liable to determination by retirement of directors by rotation;":

The majority (two-thirds) of directors must retire periodically through the process of rotation. This means that they should not hold office indefinitely; they need to retire from time to time.

"be appointed by the company in general meeting":

These directors must be appointed by the shareholders in a general meeting (like an Annual General Meeting or AGM). Shareholders vote to appoint or reappoint directors.

(b) Remaining Directors:
The remaining directors (i.e., the directors who are not part of the rotation requirement under (a)) must also be appointed in the general meeting, subject to the company's Articles of Association.

The articles may provide for the appointment of other types of directors (e.g., permanent or non-rotating directors), but in the absence of any such provision, they must still be appointed in a general meeting by shareholders.

(c) Retirement of One-Third of the Directors:
"At the first AGM after the first directors are appointed":

After the company’s first AGM, the directors who are to retire by rotation are decided.

"One-third of directors, who are liable to retire by rotation, shall retire at every AGM":

One-third of the directors (from those who are subject to rotation) must retire at each AGM. This is the rule for companies with rotating directors.

"If their number is neither three nor a multiple of three, the number nearest to one-third shall retire":

If, for example, the total number of directors who are subject to rotation is 5, then only 2 directors would retire (since 1/3 of 5 is approximately 1.67, and we round to the nearest whole number).

(d) Directors to Retire by Rotation:
"Directors who have been longest in office since their last appointment shall retire first":

Directors who have served the longest since their last reappointment (i.e., the ones who have been in office for the longest time) must retire first.

"If directors were appointed on the same day, the order of retirement shall be determined by lot":

In case two or more directors were appointed on the same date, their order of retirement will be decided randomly (i.e., by drawing lots).

(e) Filling the Vacancies:
"At the AGM, the company may fill up the vacancy by appointing the retiring director or some other person":

At the AGM, when a director retires by rotation, the company can either reappoint the retiring director or appoint a new person to fill the vacancy.

Example to Illustrate Section 152(6)
Let’s consider a public company with 5 directors.

Step 1 - Two-Thirds Rule:
According to Section 152(6)(a), two-thirds of the directors must retire by rotation. For 5 directors, this means 3 directors are subject to retirement by rotation.

Step 2 - First AGM:
At the first AGM, one-third of the directors who are liable to retire by rotation must retire. In this case, the 3 rotating directors would retire by rotation, and the company needs to appoint 1 out of these 3 to fill the vacancy (or choose someone else entirely).

Step 3 - Rotation Process:
At the next AGM, one-third of the rotating directors (i.e., 1 director out of the 3) will retire. If the total number of rotating directors is not a multiple of 3, the closest number will retire (e.g., if 5 directors were rotating, 2 would retire).

Step 4 - Filling Vacancies:
After the retirement, the company may reappoint the retiring director or appoint someone else as per the shareholder's vote.

Conclusion
Section 152(6) ensures a systematic rotation of directors in public companies to promote transparency and give shareholders a chance to vote on directors regularly. It applies a two-thirds rule for the number of directors subject to rotation, sets guidelines for determining who retires first, and allows the company to fill vacancies created by retiring directors at each AGM.

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