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Cessation of nominee director

Max Payne (employed) (2569 Points)

14 August 2014

Friends and Experts,

When does the office of Director nominated by financial institutions/ industry development authorities terminate?

Is it on the date of:

a) withdrawal of nomination

b) Board meeting in which such withdrawal is considered

c) other

Please give me guidance on this issue so that i can file DIR-12.

Thanks in advance,

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7 Replies

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 14 August 2014

It will as per the agreement between the Company nd the FIs..........and when you receive the letter of resignation from their end.....

Max Payne (employed) (2569 Points)
Replied 14 August 2014

Thank you for your response.

We have received the letter from the Promotion board on 11/04/2014. The letter sets out that the nominee director Mr. X has retired from the Promotion Board, and that Mr. Y is now being nominated. However Board meeting was convened only on 25/06/2014, wherein the new nominee director Mr. Y was appointed.

My understanding is that the resignation is effective when it has been tendered.

Please advise.

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 14 August 2014

As per sec 168 of the CA 2013, the resignation will take effect from the date of receipt by the Company or the date if any, specified by the director in the notice whichever is later.... The letter should be a proper resignation signed by MR X......A letter from the Promotion Board stating as above would not suffice...further more check whether MR X has filed DIR 11 for his resignation or not....

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Max Payne (employed) (2569 Points)
Replied 18 August 2014

Dear Vandana, thank you for explaining this. Please clarify a few doubts.

Such resignation letter has not been obtained from Mr. X. But, the Board has accepted the letter from the Promotion Board.

At the Board meeting on 25.06.2014 they have appointed a nominee director Mr. Y from whom DIR-2 was obtained and DIR-12 has been filed.

a) is the appointment of Mr. Y valid?

b) should the company still obtain a resignation letter from Mr. X, or can it file DIR-12 for Mr.X with the letter from Rubber Board as "evidence of cessation"? (It appears advisable to get the resignation letter, but i do not know if it is possible at this point)

Thanks,

g.k.

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 18 August 2014

HI, Though technically Mr Y can be appointed, but practically,depending upon the terms and conditions between the Co. and the FIs, it might not be correct....However, in case the FIs are not willing to give any resignation letter, you can attach the promotion board's letter as copy of resignation letter received....for evidence of cessation, I would advise you to go for BM minutes in which you could discuss the contents of the letter received from the Promotion Board and passed the resolution for the same...this would be much safer.....

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