Director Appointment by Shareholders

Hey! Here's a clear answer for your question about shareholders appointing additional directors without Board consent:

Can shareholders appoint new directors without Board's approval?

• Section 161(1) of the Companies Act, 2013 says that the Board can appoint additional directors between AGMs, but only up to the maximum number of directors allowed by the Articles.

• However, shareholders at the AGM have the power to appoint directors, including increasing the number of directors (subject to Articles and maximum limits).

How to appoint additional directors at AGM without Board consent?

1. Check the Articles of Association (AoA):

   • Usually, AoA will specify the maximum number of directors allowed.

   • If max number is fixed, shareholders can pass a special resolution to increase the maximum number of directors allowed. This creates new vacancies on the Board.

2. At the AGM:

   • Shareholders pass a special resolution to increase the maximum number of directors allowed on the Board (if required).

   • Then pass an ordinary resolution to appoint the additional directors in those new vacancies.

3. No Board Consent Required:

   • The shareholders, being the owners of the company, have the ultimate authority at the AGM.

   • The Board’s cooperation is not mandatory to increase the number of directors or appoint directors at the AGM.

Relevant sections:

• Section 149(1): Board should have minimum directors and maximum as per Articles.

• Section 152(2): Appointment of directors by shareholders in the AGM.

• Section 61: Power of members to alter Articles, which may include increasing number of directors.

• Section 101 & 102: Notice and agenda of AGM must include proposals for appointment/increase of directors.

Summary:

• Shareholders can increase the Board size by amending AoA (special resolution).

• They can then appoint additional directors by ordinary resolution in the AGM.

• Board’s consent is not needed for these steps.

• Proper notice of these resolutions must be given before the AGM.