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calculation under 255, 256

poonam (n.a.) (25 Points)

07 May 2010

Please tell me if in a comapny there are 6 Director including 1 MD which is non rotational. then whether as per section 256 it is 2 directors that will retire in the AGM or not?

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17 Replies

nidhi (student) (58 Points)
Replied 07 May 2010

yes 2 directors should retire in AGM.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 07 May 2010

Hello,

In the present case company has 6 directors in office. The number of Director liable to retire by rotation u/s 255 comes to 4 (2/3^rd of 6 is 4). Managing Director comes in the balance 2 Non-rotational directors.

Director should retire u/s 256 ==== Nearest to 1/3^rd of rotational directors comes to 1. (1/3^rd of 4 is 1.33 i.e. nearest to 1.33 is 1).

Conclusion

Therefore one director shall retire from the office at the ensuing AGM. However he shall be eligible for re-appointment.

Best Regards

2 Like

CA Babit Khurana (learning is my passion) (338 Points)
Replied 08 May 2010

No ankur sir is explain the provision very well only 2/3rd of rotational only one 1/3rd as retire by rotation.

Narendra Verma (Senior Executive) (116 Points)
Replied 08 May 2010

Yes I agree.

Prasanth Nair V (ACA,ACS,CWA Final,Mcom) (557 Points)
Replied 08 May 2010

In This Case the Company has 6 Directors including 1MD who is appointed for a fixed time

Minimum number of Directors who are req to rotate is 2/3 of the total number of Directors.as per Sec 255

Therefore its 2/3 of 6 =4 directors.

But in this case, except MD all the other 5 of them are rotational.

So 1/3 of 5 are req to rotate in the upcoming AGM, which comes to 1.66, rounded off to 2 Directors, as per setion 256......

Hope u understood, Poonam!

nidhi (student) (58 Points)
Replied 12 May 2010

thank u Ankur Sir, i was probably wrong n 1 director would retire

Because as per Section 256, 1/3 of the directors r to retire by rotation (as determined u/s 255 which is 4 and not 5)

Therfore 1 Director would retire

Neeta (Finance) (345 Points)
Replied 12 May 2010

No doubts poonam, u can go ahead with the conclusion of ankur sir.

others plz take note that,section 256 and 255 need be read together. Section 255 says about the quantum of Rotational Directors ,ie, not less than 2/3rd of the total number of directors of public company shall be persons liable to determination by retrement of directors by rotation.

then section 256 says : 1/3rd of directors as are liable to retire by rotation shall retire from office.

So here , as caculated by the learned member 4 (2/3rd of 6) should be directors liable to retire by rotation or in other words u can have 2 amongst 6 being the directors not liable to retire by rotation.

now amongst this 4 directors , as per sec 256 , 1 ( nearest of 1/3rd of 4 ) shall retire at the ensuing AGM., eligible for reappointment.

poonam (n.a.) (25 Points)
Replied 12 May 2010

Thank you all for such perfect replies.

C.A Alok Mukherjee (service) (462 Points)
Replied 10 August 2010

Hellow,

I have a question if you read section 256(2) the persons who have become directors on the same day are to retire shall in default of and subject to any agreement be determined by lot. Here the question is dermination "by lot" in what form ? Whether it is in form of lottery or by show of hands or poll?