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Sec 255 and 256 of the companies act 1956

charulata kabra (company secretary) (32 Points)

28 March 2013

A public limited company has 5 Directors,....one is WTD then please tell me how many directors will retire by rotation every year....with calculations please.......................?

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2 Replies

Rakesh Dhanuka (Company Secretary) (478 Points)
Replied 28 March 2013

Two-third of the total number of directors shall be persons whose office is liable to determination by retirement of directors by rotation.........so in your case............2/3 of 5 is 3.33 which is to be rounderd off to 4............hence 4 directors shall be such who is liable to retire by rotation

and as per section 256 1/3rd of the such directors (4 in ur case) which comes to 1.33 rounded off to 2 dirs shall retire by rotation in every AGM who been longest in office.........

hope this will be helpful to understand......experts plz rectify if am wrong...

Aditya Soni (CS Final Student Trainee) (727 Points)
Replied 28 March 2013

Originally posted by : Rakesh Dhanuka
	Two-third of the total number of directors shall be persons whose office is liable to determination by retirement of directors by rotation.........so in your case............2/3 of 5 is 3.33 which is to be rounderd off to 4............hence 4 directors shall be such who is liable to retire by rotation and as per section 256 1/3rd of the such directors (4 in ur case) which comes to 1.33 rounded off to 2 dirs shall retire by rotation in every AGM who been longest in office......... hope this will be helpful to understand......experts plz rectify if am wrong...

Agree with Rakesh, but at some points, i have a dif. openion.

as section 256(1) says,

"At the first annual general meeting of a public company, or a private company which is a subsidiary of a public company held next after the date of the general meeting at which the first directors are appointed in accordance with section 255 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 not three or a multiple of three, then, the number nearest to one-third, shall retire from office."

above statement says Nearest to the one-third. it means we can retire 1 director as well, but..

if we go for the purpose of this provision, it emphasizes on the retirement of the directors at least once in every three years, so... for this purpose, we can opt the options as..... retire 1, 1 and 2 director in first, second and third year respectively.

Experts comments are welcome...

Regards,

Aditya