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Appointment of director

Mamta Batra (CS) (376 Points)

05 June 2009

In a public company there are 3 directors.

Now the company wants to appoint 3 more directors

1. How to appoint them by passing single resoution?

2.How to resign the first directors of the company, where 2 director are rotational and 1 director is non- rotational?

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32 Replies

Gargi Ranade (CS) (619 Points)
Replied 06 June 2009

Dear Mamta!

Public limited Company can appoint 3 more directors directly as a regular director,if you are appointing them through AGM , however you can appoint them through Board Meeting as a Additional Director to hold the post of Director up to coming AGM .

If you are appointing them through AGM you are required to file form 32 as Director.

but if you are appointing them as additional director you need to file form 32 twice first within 30 days of passing Board Resolution for appointment as additional Director, second, as appointment of regular Director within 30days of AGM .

In AGM you can pass ordinary resolution hence no need to file form 23 , but as it is special business, provide explanatory statement in AGM notice regarding regularasation .

As per my knowledge section 263 a motion shall not be made for the appointment of two directors through single resolution ,hence you can pass two different resolution for two directors in the same meeting.

If you want detail checklist for appointment of directors I will post same afterward .

regarding rotational Directors you have to pass resolution in AGM that these directors are eligible for retire by rotation hence retired and can be reappointed through same meeting

If you are reappointing them no need to file form 32 but if they are not getting reappointed then you have to file form 32 for their retirement.

I am not getting you point regarding " 1direcor is non-rotational " so I am not able to provide clarification on that point .

Regards , Ms. Gargi

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 06 June 2009

To Gargi,

One correction Gargi---You may appoint 3 new directors in the EGM also coz language used by Section257 is General Meeting.

To Ms. Mamta,

You can not appoint all 3 directors by single resolution by virtue of Section-263 as rightly pointed out by Gargi.

After appointing 3 new directors the total strength of the board would be 6 which includes 1 non rotational director.

For the purpose of section-255 total strength of the board would be 6 & rotational directors would be 2/3 of 6 i.e. 4 directors.

Now your rotational directors are 4 and non rotational directors are 2.

Further as per section 256 ---1/3 of rotational directors shall retire at each AGM. Hence 1/3 of 4 would be 1.33. (As per the language of 256 nearest to 1/3 we can round off 1.33 as 1).

In your AGM you have to retire only 1 director as rotational director and that 1 director should be out of 2 directors presently in the board.

Best Regards

2 Like

Gaurav Kumar (CS) (24 Points)
Replied 06 June 2009

Dear Mamta,

I totally agree with ms. gargi............., I have done it before in my company...you just appoint the directors at BM as Additional Director and afterwards confirm them in AGM and file f-32 as suggested by gargi...

as far as retire by rotation is concerned if the directors are retiting then retire the same and reappoint him in the same AGM.......

Warm Regards,

Gaurav Kumar

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 06 June 2009

Disagree with Mr. Gaurav.

If you want to confirm Additional Directors as regular director no need to wait till AGM. At any point of time, but before the due time for holding AGM for the year, by convening Extra-Ordinary General Meeting you may regularize him and file form-32 accordingly.

Regards

1 Like

Gargi Ranade (CS) (619 Points)
Replied 06 June 2009

Dear Ankur Sir,

first of all thanks for correcting me

yes we can appoint regular director through EGM also but if we are appointing director as additional director in EGM we need to regularise him only through AGM .

It is policy of my Co. if they incerese number of director they initialy appoint director as additional director and regularise him through EGM.

however I totally agree with you as legally it is not at all necessary to appoint director initialy as additional director through EGM.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 06 June 2009

Gargi,

Kindly appreciate Section 257 govern the regularisation and Section 260 govern the appointment of A.D.

Section 260 talks about the appointment & tenure of AD and remain silent about further course of action.

Section 257 deals with the regularisation through GM.

Hence in my view and as per Section scheme discussed above your interpretation is incorrect.

I totally disagree with the line below:

I think this section specificaly mention need of regularisation through AGM

As section 260 is absolutely silent about regularisation.

Regards

Gargi Ranade (CS) (619 Points)
Replied 06 June 2009

Dear Ankur Sir,

Please refer my earlier modified reply, I was modifying my reply when you posted your clarification to section 260 ,as I come to know that you were talking regarding appointment of regular director .

but still I am confused about AD point you mentioned as section 260 about appointment of AD states that AD should be regularise through AGM only.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 06 June 2009

Gargi, Kindly observe you are writing “we can appoint regular director through EGM also but if we are appointing director as additional director in EGM we need to regularise him only through AGM.”

I think you have misunderstood Section-260. You can not appoint Additional Director through EGM or AGM. Appointment of Additional Director is prerogative of board of directors and such appointment can be made only by a duly convened BM and not by circulation u/s 289.

Suppose you have appointed Mr. A as Additional Director on 01.01.2009 and your AGM is to be held on 30.09.2009. Then in that case tenure of your Additional Director would be only up to the commencement of AGM on 30.09.2009 as per section 260 and in that particular AGM you can regularize Mr. A u/s 257 as director & file Form-32 accordingly.

Now observe carefully

If for any kind of special agenda you need to convene EGM in between the 2 dates mentioned above say on 25.05.2009 then in that particular EGM you can easily regularize Mr. A u/s 257 as director & file Form-32 accordingly along with carrying other agendas of EGM. In short you don’t have to wait till AGM (30.09.2009). Reason being regularization is governed by section 257 which talked about General Meeting.

Hope this discussion would be of some help to you.

Best Regards

3 Like

Gargi Ranade (CS) (619 Points)
Replied 06 June 2009

Thanks Ankur Sir for clarifying my doubts ! It was indeed nice explanation .

Gaurav Kumar (CS) (24 Points)
Replied 06 June 2009

Dear Ankur Sir,

If we are regularising the director in General Meeting then it not mandatory to take it in coming EGM, Law is silent on that...you can skip the regularisation of Dir. for any reason if there is an EGM in between and can take the regularisation in coming AGM..and file the form accordingly....

warm regards,

Gaurav