Section 259. Increase in number of directors to require Government sanction
In the case of a public company or a private company which is a subsidiary of a public company, any increase in the number of its directors, except-
(a) in the case of a company which was in existence on the 21st day of July, 1951, an increase which was within the permissible maximum under its articles as in force on that date, and
(b) in the case of a company which came or may come into existence after that date, an increase which is within the permissible maximum under its articles as first registered,
shall not have any effect unless approved by the Central Government; and shall become void if, and in so far as, it is disapproved by that Government :
[Provided that where such permissible maximum is twelve or less than twelve, no approval of the Central Government shall be required if the increase in the number of its directors does not make the total number of its directors more than twelve.]
Interpretation:
if first articles provide for max number of directors more than 12: Approval of CG required only if total number of directors becomes more than permissible under such articles.
If first articles provide for max number of directors equal to or less than 12: Approval of CG required only if total number of directors becomes more than 12.
Note: in short we can say, that approval of CG is required only if total number of directors becomes more than limits as permissible in articles and more than 12.
CAclubindia
